Acquisition Overview - MEC will acquire Accu-Fab for $140.5 million, plus customary adjustments, funded through MEC's existing $250 million Credit Facility[8] - The transaction is expected to close in 3Q25, subject to customary closing conditions[8] - Accu-Fab's 2024 Adjusted EBITDA margin was approximately 23%, with net sales growth exceeding 20%[9] - MEC plans to retain all approximately 250 Accu-Fab employees[9,14] Strategic Rationale - Accu-Fab diversifies MEC's revenue into higher-value, emerging end-markets like critical power infrastructure, data centers, and renewable energy[6,8] - Accu-Fab's premium markets drive increased margins and over 50% FCF conversion[11] - Identified $4-$6 million in potential annual revenue and cost synergies over the next 24 months[9] - Accretive profitability, synergies, and growth trajectory support an IRR of approximately 15%[11] Financial Impact - Accu-Fab's revenue was approximately $61 million in FY2024 with Adjusted EBITDA of approximately $14 million[14] - Pro-forma combined annual sales are approximately $643 million with Adjusted EBITDA of approximately $78 million[25] - Expects pro-forma, TTM net leverage of approximately 3.0x at closing[9]

Financial Data and Key Metrics Changes - Total sales for the first quarter decreased by 15.9% year over year to $135.6 million, primarily due to softer customer demand and inventory destocking [21][22] - Manufacturing margin was $15.3 million, down from $20.9 million in the prior year, with a manufacturing margin rate of 11.3% compared to 13% previously [21][22] - Adjusted EBITDA for the first quarter was $12.2 million, down from $18.5 million year over year, with an adjusted EBITDA margin of 9% [23][24] - Free cash flow was $5.4 million, down from $7.9 million in the prior year, reflecting lower sales [25] Business Line Data and Key Metrics Changes - Commercial vehicle market sales were $50.9 million, a decrease of 13.7% year over year, outperforming the broader market by 300 basis points [7] - Powersports market revenue decreased by 26.5% year over year, driven by inventory destocking and soft demand [8][9] - Construction and access market revenue decreased by 31.4% year over year, reflecting soft demand across non-residential and public infrastructure markets [9] - Agricultural market revenue decreased by 26.9% year over year, with uncertainty in demand due to trade policy impacts [10] Market Data and Key Metrics Changes - The commercial vehicle market is expected to see a decrease of 22.9% in Class eight vehicle production in 2025, with a potential recovery in 2026 [7][8] - The military market is expected to increase by mid-teens, while other end markets are projected to grow by high teens [26][27] Company Strategy and Development Direction - The company is maintaining its full-year guidance, driven by strong execution and demand in less cyclical military and other end markets [5][26] - The focus remains on operational efficiency and cost discipline, with a commitment to debt repayment and share repurchases [15][17] - The company is actively pursuing M&A opportunities to diversify its customer base and expand into high-growth adjacent markets [17][86] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to expand market share despite a dynamic macroeconomic environment [19] - The company is closely monitoring regulatory and macroeconomic developments that could impact demand in the second half of the year [5][19] - A playbook has been developed to navigate potential recessionary scenarios and regulatory changes [28][53] Other Important Information - The company generated $5.4 million in free cash flow, resulting in a free cash flow conversion of 44% of adjusted EBITDA [13] - The company has returned $9.6 million to shareholders through share repurchases over the last two years [16] Q&A Session Summary Question: What is the outlook for end markets in the second half? - Management indicated a slight uptick in the commercial vehicle market in the second half, while powersports and agriculture are expected to remain steady [31][32] Question: Are there opportunities related to tariffs and reshoring? - Management noted ongoing discussions with customers regarding tariffs and reshoring, with a focus on domestic manufacturing [33][34] Question: What is the expected recovery for agriculture and powersports? - Agriculture is expected to decline mid-twenties, while powersports is projected to decrease mid-single digits to mid-teens [42][70] Question: What is the progress on the $100 million new business target? - The company is ahead of schedule, with $35 to $40 million of new business booked by April, primarily from existing customers [75][78] Question: What are the priorities for M&A? - The top priority is diversification of end markets, followed by maintaining an accretive margin profile and geographic proximity to customers [85][86]

Financial Data and Key Metrics Changes - Total sales for Q1 2025 decreased by 15.9% year over year to $135.6 million, attributed to softer customer demand and inventory destocking [21][22] - Adjusted EBITDA for Q1 was $12.2 million, down from $18.5 million in the prior year, with an adjusted EBITDA margin of 9% compared to 11.5% [23][24] - Free cash flow for the quarter was $5.4 million, down from $7.9 million in the prior year [24] Business Line Data and Key Metrics Changes - Net sales to the commercial vehicle market decreased by 13.7% year over year to $50.9 million, outperforming the broader market by 300 basis points [7] - Powersports market revenue decreased by 26.5% year over year, driven by inventory destocking and soft demand [9] - Construction and access market revenue decreased by 31.4% year over year, reflecting weak demand across non-residential and public infrastructure markets [10] - Agricultural market revenue decreased by 26.9% year over year, with uncertainty in demand due to interest rates and inventory destocking [11] Market Data and Key Metrics Changes - The commercial vehicle market is expected to see a decrease of 22.9% in production in 2025, with a potential recovery in 2026 [7][8] - The military market is projected to increase by mid-teens, while other end markets are expected to see high-teens growth [27] - The agriculture market is anticipated to decline by mid-twenties percentage in 2025, with a gradual recovery expected in 2026 [27][66] Company Strategy and Development Direction - The company is maintaining its full-year guidance, driven by strong execution and demand in less cyclical military and other end markets [5] - The focus remains on operational efficiency and cost discipline through the MBX framework, which has contributed to margin improvements [4][14] - M&A activity is a cornerstone of the company's strategy to diversify its customer base and expand into high-growth adjacent markets [17][81] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to expand market share despite a dynamic macroeconomic environment [19] - The company is closely monitoring regulatory and macroeconomic developments that could impact demand in the second half of the year [5][27] - A contingency plan has been developed to manage potential demand shifts and maintain profitability [19][28] Other Important Information - The company repurchased $1.7 million of common stock during the quarter, with a commitment to return capital to shareholders [16] - The company expects to be below one times net debt leverage by the end of 2025, excluding M&A activity [15][29] Q&A Session Summary Question: What is the outlook for end markets in the second half? - Management indicated a slight uptick in the commercial vehicle market in the second half, driven by potential regulation changes and pre-buys [31][32] Question: Are there opportunities related to tariffs and reshoring? - Management noted ongoing discussions with customers regarding tariffs and reshoring, with a strong domestic sourcing position [33][36] Question: What is the expected recovery for agriculture and powersports? - Agriculture is expected to decline mid-twenties, while powersports is forecasted to decrease mid-single to mid-teens [41][66] Question: How is the company progressing towards the $100 million new business target? - The company is ahead of schedule, with $35 to $40 million booked by April, primarily from existing customers [71][74] Question: What are the priorities for M&A activity? - The top priority is diversification of end markets, followed by maintaining an accretive margin profile [82]

Financial Performance - Net sales decreased by 15.9% year-over-year to $135.6 million in 1Q25, primarily due to customer channel inventory destocking[5, 17, 20] - Adjusted EBITDA decreased year-over-year to $12.2 million, with an Adjusted EBITDA margin of 9.0%, a 140bps increase compared to 4Q24[8, 10] - Free Cash Flow was $5.4 million in 1Q25, supported by working capital efficiency initiatives[8, 10] - Adjusted Diluted EPS was $0.04 in 1Q25[8, 10] Capital Allocation and Balance Sheet - The company ended 1Q25 with a net leverage of 1.4x, down from 2.0x at the end of 1Q24[8] - $1.7 million of shares were repurchased during the quarter[8] - Total cash and available liquidity stood at $203 million[30] Outlook and Guidance - The company maintained FY25 guidance, supported by strong year-to-date execution and stronger than expected demand within the Military and Other end markets[7] - Revenue for 2025 is projected to be between $560 million and $590 million, representing a decrease of (4%) to 1% year-over-year[32] - Adjusted EBITDA for 2025 is projected to be between $60 million and $66 million, representing a decrease of (7%) to 2% year-over-year[32] - Free cash flow for 2025 is projected to be between $43 million and $50 million, representing a decrease of (45%) to (36%) year-over-year[32] End-Market Outlook - The company anticipates subdued customer demand in the first half of 2025, with gradual improvement in the second half as channel inventory levels normalize[12] - The company expects year-over-year net sales changes in 2025 for the following end markets: Commercial Vehicle: (1%) – (5%), Construction & Access: 0% – (5%), Powersports: (5%) – (15%), Agriculture: (22%) – (28%), Military: 10% – 15%, Other: 18% – 20%[13, 32]