mec(US:MEC)2024-11-06 16:30Financial Performance - Net sales for the three months ended September 30, 2024, were $135,392, a decrease of $22,825 or 14.4% compared to $158,217 for the same period in 2023, driven by reduced demand and customer inventory de-stocking [121]. - Manufacturing margins decreased to $17,095 for the three months ended September 30, 2024, down $1,925 or 10.1% from $19,020 in the prior year, primarily due to lower end market demand [122]. - EBITDA for the three months ended September 30, 2024, was $15,209, a slight decrease of $292 or 1.9% from $15,501 in the same period of 2023 [121]. - Adjusted EBITDA for the three months ended September 30, 2024, was $17,062, down from $19,211 in the prior year, reflecting a decrease of $2,149 or 11.2% [119]. - Net sales for the nine months ended September 30, 2024, were $460,298, an increase of $20,455 or 4.7% compared to $439,843 for the same period in 2023 [131]. - Manufacturing margins increased to $60,305 for the nine months ended September 30, 2024, up $8,813 or 17.1% from $51,492 in the prior year [132]. - Net income and comprehensive income rose to $9,997 for the nine months ended September 30, 2024, reflecting an increase of $4,380 or 78.0% compared to $5,617 in 2023 [131]. - EBITDA for the nine months ended September 30, 2024, was $49,633, an increase of $9,514 or 23.7% from $40,119 in the previous year [139]. Expenses and Margins - EBITDA margin improved to 11.2% for the three months ended September 30, 2024, compared to 9.8% in the same period of 2023, an increase of 1.4 percentage points [121]. - Adjusted EBITDA margin was 12.6% for the three months ended September 30, 2024, compared to 12.1% in the prior year, reflecting a 0.5 percentage point increase [119]. - Interest expense decreased to $2,653 for the three months ended September 30, 2024, down $1,254 or 32.1% from $3,907 in the same period of 2023, due to lower borrowings and interest rates [128]. - Other selling, general, and administrative expenses were $7,559 for the three months ended September 30, 2024, a decrease of $1,049 or 12.2% from $8,608 in the prior year, primarily due to lower legal fees [126]. - Profit-sharing, bonuses, and deferred compensation expenses decreased to $2,076 for the three months ended September 30, 2024, down $270 or 11.5% from $2,346 in the same period of 2023 [125]. - Amortization of intangible assets decreased to $1,733 for the three months ended September 30, 2024, a decrease of $440 or 20.2% from $2,173 in the prior year, due to full amortization of certain assets [124]. - Interest expense increased to $8,977 for the nine months ended September 30, 2024, an increase of $1,444 or 19.2% compared to $7,533 in 2023 [137]. Cash Flow and Capital Management - Cash provided by operating activities was $51,847 for the nine months ended September 30, 2024, a significant increase of $38,151 or 279% compared to $13,696 in 2023 [140]. - Cash used in investing activities decreased to $9,645 for the nine months ended September 30, 2024, down $88,009 or 90% from $97,654 in the prior year [141]. - The company had a consolidated total leverage ratio of 1.59 to 1.00 as of September 30, 2024, well below the maximum limit of 3.50 to 1.00 [148]. - Capital expenditures for the full year 2024 are expected to be between $13,000 and $15,000 [151]. - The company had availability of $138,955 under the revolving credit facility at September 30, 2024 [146]. - The company expects to remain compliant with financial covenants through 2024 and the foreseeable future, ensuring access to capital under the Credit Agreement [152]. - Operating cash flow and available borrowings are deemed sufficient to fund operations for 2024 and beyond, although future cash flows are subject to various variables [153]. - Total contractual obligations as of September 30, 2024, amount to $130.4 million, including long-term debt principal payments of $111.9 million due by 2028 [154]. - The company has $111.0 million borrowed under the revolving credit facility with an interest rate of 7.22% as of September 30, 2024 [158]. - A hypothetical 100-basis-point increase in interest rates would result in an additional $1.0 million of interest expense based on variable rate debt [159]. Market Risks - The company is exposed to commodity price fluctuations for materials such as steel, aluminum, and copper, which could negatively impact results [160]. - The company does not currently have any commodity hedging instruments in place to mitigate price fluctuations [160]. - Customer order forecasts can fluctuate dramatically from quarter to quarter, impacting the use and consumption of the company's products and services [156]. - The company selectively uses financial instruments to manage market risks related to customer forecasts and interest rates [155]. - The company has SOFR-based floating rate borrowings, exposing it to variability in interest payments due to changes in interest rates [157].