Summary of Mayville Engineering Company (MEC) Acquisition Call Company and Industry - Company: Mayville Engineering Company (MEC) - Acquired Company: AccuFab LLC - Industry: Metal fabrication solutions, focusing on high growth end markets such as critical power infrastructure, data centers, and renewable energy Key Points and Arguments 1. Acquisition Details: MEC announced the acquisition of AccuFab for a total cash consideration of $140.5 million, with customary adjustments expected to close in Q3 2025 [4][5][13] 2. Strategic Fit: AccuFab is a vertically integrated provider, enhancing MEC's geographic footprint and allowing for better service to customers in high growth markets [4][5] 3. Cultural Alignment: AccuFab's technology-forward approach and strong innovation track record complement MEC's operations [5] 4. Financial Impact: The acquisition is expected to be immediately accretive to adjusted EBITDA, margin, and earnings per share, with projected revenues of $28 million to $32 million and adjusted EBITDA of $6 million to $8 million in the second half of 2025 [14][15] 5. Operational Synergies: MEC anticipates generating approximately $1 million in annual cost synergies by 2026 through the implementation of its MBX Lean manufacturing framework [10][11] 6. Market Diversification: The acquisition allows MEC to diversify into less cyclical, high-growth markets, moving away from its legacy focus on wheeled mobility platforms [8][9] 7. Revenue Synergies: MEC estimates potential revenue synergies of $3 million to $5 million over the next 24 months, with further upside as customer relationships deepen [10] 8. Capacity Utilization: AccuFab is currently operating at 50-60% capacity, providing an opportunity for MEC to drive incremental volume and growth [11][61] 9. Customer Base: AccuFab's top 10 customers account for approximately 75% of its revenue, with limited overlap with MEC's existing customer base [33] 10. Debt Management: MEC plans to prioritize free cash flow generation to reduce net leverage from approximately three times to 1.5-2 times within 18 months post-acquisition [15][39] Additional Important Information - Integration Timeline: The initial integration process is expected to take about six months [6] - Management Retention: The current management team at AccuFab will remain post-acquisition, facilitating a smoother integration process [50] - CapEx Requirements: Expected annual capital investment for AccuFab is projected to be between $2 million and $3 million, aligning with MEC's previous guidance [39] - Market Growth: The data center and critical power markets are projected to grow by 20% from 2023 to 2024, making them attractive for MEC's expansion [25] - Competitive Landscape: AccuFab operates in a competitive environment with significant players, but its 95% sole-source revenue indicates strong customer reliance [71] This summary encapsulates the key aspects of the acquisition call, highlighting the strategic rationale, financial implications, and operational plans associated with the acquisition of AccuFab by Mayville Engineering Company.
Mayville Engineering Company (MEC) M&A Announcement Transcript