mec(US:MEC)2025-11-05 21:01Financial Performance - Net sales for the three months ended September 30, 2025, were $144,310, an increase of $8,918 or 6.6% compared to $135,392 in the same period of 2024, driven by the acquisition of Accu-Fab[141] - EBITDA for the three months ended September 30, 2025, was $11,184, a decrease of $4,025 or 26.5% compared to $15,209 in 2024[141] - Adjusted EBITDA for the same period was $14,081, down $2,981 or 17.5% from $17,062 in 2024[141] - Net income (loss) for the three months ended September 30, 2025, was $(2,675), a decrease of $5,649 or 189.9% compared to $2,974 in 2024[141] - Net sales decreased by $48,081 or 10.4%, totaling $412,217 for the nine months ended September 30, 2025, compared to $460,298 in the prior year, driven by reduced customer demand and inventory destocking[151] - EBITDA decreased by $17,709 or 35.7%, amounting to $31,924 for the nine months ended September 30, 2025, compared to $49,633 in the previous year[151][160] Margins and Expenses - Manufacturing margins decreased to $15,939 for the three months ended September 30, 2025, down $1,156 or 6.8% from $17,095 in 2024, primarily due to restructuring costs and inventory step-up expenses[142] - Manufacturing margin percentage decreased to 11.0% for the three months ended September 30, 2025, down 160 basis points from 12.6% in 2024[143] - Manufacturing margins fell to $45,091, a decrease of $15,214 or 25.2%, with margin percentages dropping from 13.1% to 10.9% due to softening demand and restructuring costs[152][153] - Other selling, general and administrative expenses rose to $10,545 for the three months ended September 30, 2025, an increase of $2,986 or 39.5% compared to $7,559 in 2024[146] - Interest expense increased to $3,430 for the three months ended September 30, 2025, up $777 or 29.3% from $2,653 in 2024[147] - Amortization of intangible assets increased to $3,125 for the three months ended September 30, 2025, up $1,392 or 80.3% from $1,733 in 2024, due to the Accu-Fab acquisition[144] Cash Flow and Investments - Free cash flow for the nine months ended September 30, 2025, was $16,751, a decrease of $25,343 or 60.2% compared to $42,094 in 2024[139] - Cash provided by operating activities was $25,181, down $26,666 or 51.4% from $51,847 in the prior year, primarily due to lower net income and increased accounts receivable[161] - Cash used in investing activities surged to $148,470, an increase of $138,825 or 1,439.3%, largely due to the acquisition of Accu-Fab[162] - Cash provided by financing activities was $124,300, a significant increase of $166,996 compared to cash used of $42,696 in the prior year, driven by increased borrowings[163] Debt and Leverage - The company had a consolidated total leverage ratio of 3.47 to 1.00 as of September 30, 2025, below the maximum limit of 4.00 to 1.00[169] - The company has long-term debt principal payment obligations totaling $213.733 million due by 2028, with forecasted interest payments of $26.777 million[177] - As of September 30, 2025, the company has borrowed $211.858 million under its revolving credit facility at an interest rate of 5.39%[182] - Interest expense decreased by $2,582 or 28.8%, totaling $6,395 for the nine months ended September 30, 2025, due to lower interest rates[158] Market Risks and Obligations - The company is exposed to market risks from changes in customer forecasts, interest rates, and commodity prices, and employs financial instruments to mitigate these risks[179] - Commodity price fluctuations could negatively impact the company's results, but it aims to pass these costs onto customers to protect profit margins[184] - Total contractual obligations and commitments amount to $280.357 million, with significant payments due in 2026-2029[177] - The company has finance lease obligations of $2.612 million and operating lease obligations of $37.235 million[177] - The company does not currently utilize commodity hedging instruments to manage raw material price fluctuations[184] - The company’s cash flow could be negatively affected by rising interest rates, impacting its ability to finance operations and acquisitions[183] - The company’s operations may require additional capital for acquisitions, which may not be available on acceptable terms[176]