Mayville Engineering Company, Inc.

And welcome to the Mayville Engineering Third Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Nathan Elwell. Please go ahead.

Thank you. Welcome everyone and thank you for joining us on today's call. A few quick items before we begin. First, please note that some of the information that you will hear during this call will consist of forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended. Such statements express our expectations, anticipations, beliefs, estimates, intentions, plans, and forecasts. Because these forward-looking statements involve risks, assumptions, and uncertainties, Our actual results could differ materially from those in the forward-looking statements. For more information regarding such risks and uncertainties, please see our filings with the Securities and Exchange Commission, including our Form 10-K for the period ended December 31, 2019, and our filing on Form 10-Q for the period ended June 30, 2020. We assume no obligation and do not intend to update any such forward-looking statements, except as required by Federal securities laws. Second, this call will involve a discussion of certain non-GAAP financial measures. Reconciliation of these measures to the closest GAAP financial measure is included in the earnings press release, which is available at mechinc.com. Joining me on the call today is Bob Kamphuis, Chairman, President, and Chief Executive Officer, Todd Butts, Chief Financial Officer, and Ryan Raber, EVP of Strategy, Sales, and Marketing. First, Bob will provide an overview of our performance. Then Todd will review our financial results. Bob, please go ahead.

Thank you, Nathan. Good morning, everyone. Before we discuss our third quarter results, I wanted to provide a brief update regarding the health and well-being of our employee shareholders. We've been operating effectively under pandemic conditions for several months, and I'm pleased to report we've done a good job of creating a safe environment for our workforce and have avoided any widespread outbreaks at any of our facilities so far. We're certainly not taking this for granted and remain vigilant with our protocols to do everything we can to ensure the health and safety at all of our facilities. With that said, let's now turn to results. After navigating a very challenging second quarter when many customers were shut down, We delivered improved results during the third quarter as customers started to get back to work. All things considered, we're pleased with our performance. Despite ongoing COVID risks and challenges, we delivered encouraging top-line results as many of our customers ramped up production during the quarter, which led to volume returning for MEC. From a cost management perspective, we're pleased with the progress we've made in optimizing our manufacturing operations. We continue to implement measures to maximize our efficiency, productivity, and the impact of these initiatives and beginning to flow down to our bottom line. For the third quarter, we generated net sales of $91.1 million and adjusted EBITDA of $9.8 million. While we're encouraged by the sequential improvement of our financial performance, we see even more improvement potential and continue to strive to improve our results going forward. Throughout 2020 as a whole, we've made great strides in improving the operational efficiency of our organization in three main ways. First, by realizing full-year benefits from the acquisition synergies with DMP. Second, by realizing efficiencies from our recent investments in technology and automation. And third, from the recent consolidation of our Greenwood, South Carolina Capacity Footprint, which I'll explain in more detail. As a reminder, our DMP acquisition has now been fully integrated into our organization for several months. We're seeing the expected synergies manifest themselves and are excited to see this business continue to trend positively over the coming quarters. On the Greenwood topic, led by our new COO, Rand Stile, Our highly skilled team of planners and engineers did a fantastic job of implementing the transition and ensuring that everything went according to plan. Our inventory management initiatives were executed perfectly, guaranteeing we did not miss a beat with our customers. All the former Greenwood-based programs have now been moved to five other manufacturing facilities around the country and are now fully up and running. All of the necessary equipment from this facility have been transferred to other locations. We have sold excess equipment and are preparing the facility for sale. As a reminder, we have reduced overhead costs as well by maintaining our overall manufacturing capacity despite this reduction in footprint. For the former Greenwood manufactured parts, we have also reduced related working capital. and expect improved margins at the new manufacturing locations over the long run. All in all, the process went according to plan and the timing could not have been better. Coupled with the contributions that our investments in automation are generating, we are pleased with how well we've been able to manage our cost structure this year. That brings us to our end markets and what are we seeing throughout the industry. After many of our customers experienced pandemic-related shutdowns near the end of the first quarter and end of the second quarter, there were far fewer disruptions during the third quarter, and operational ramp-ups progressed slightly better than planned across the board. Our customers are continuing to get back towards more normal production schedules, albeit at lower volumes for some, and the relative calmness compared to previous quarters has certainly been welcomed. We are encouraged that the tides are beginning to turn for many of our major end markets, which are showing early signs of stabilization and improvement. In our commercial vehicle markets especially, based on industry data and customer feedback, we believe the pullbacks seen over the past 12 months are mostly behind us. Our orders during the quarter were in line or above industry forecasts. With more robust freight rates returning as a result of increasing orders from carriers and large fleets, we anticipate that the market will continue to improve in the near term. Throughout the pandemic, the power sports market has displayed significant relative strength. With people unable to travel far, they have increasingly engaged in forms of local outdoor recreation. and we continue to believe that this will be an area of strength for our business near term as these MEC customers rebuild dealer inventory and meet consumer demand. As we have consistently noted, the construction and access and our agricultural end markets have been challenging over the past 12 months with inventory destocking being a notable issue. We are cautiously optimistic that the worst of the destocking is behind us at this time, and we are hopeful that the situation will continue to slowly improve going forward. As the world has rapidly changed since March, there are increasing questions as it relates to the non-residential construction market. While we are hopeful that this business picks up in the future, the timetable and magnitude are certainly unknowns at this point. We continue to be in close contact with our customers in this segment as everyone continues to adapt to the challenges of this new environment. Finally, our military segment has continued to be a steady market for us. We continue to be encouraged with our business for this market and will look for it to be an ongoing source of strength for us in the coming years. Our efforts relating to capturing additional market share are progressing well Despite the headwinds we have faced in the last months, I want to reiterate that no contracts or customer relationships have been lost this year. This means as our customer volumes return, our volumes will also return, and we are ready to deliver. Overall, we're encouraged by the broader trends that we are starting to see across our end markets, as some of the headwinds that we have faced over the past 12 months are starting to dissipate. In addition to the advancements that we've made in our current operations, we are diligently seeking out new projects and takeover business in both our current markets that we serve and attractive new lines of business. In recent months, we've been able to secure market share growth across multiple product lines for one of our important commercial vehicle customers. This was done through product development activities with the new programs launching next year as our customer brings on their new models of trucks. In the ag market, we recently secured new contracts for a tractor platform at an existing customer that continues to bring new technology to the market. This highlights our ability to build long-term relationships and grow alongside our customers. We've seen a very active power sports market this year. We've secured both volume expansion and added new products with existing customers. We are also pursuing potential awards with multiple new customers in this market. With our ability to ramp up capacity to support rapid expansion of products in both takeover and product development cycles, we are well positioned to help customers meet their growing demand. In previous calls, we've also mentioned the work we are doing in the warehousing and package management space. We launched programs with a new customer earlier in 2020, which has continued to see sequential growth, both due to increased volumes and the customer's expansion of market share as we continue to build this promising partnership. Overall, we believe that there are multiple interesting opportunities for new projects and Takeover Business in our pipeline, and we are excited to explore these new avenues in the weeks and months ahead. So despite the challenges faced in the past year, we continue to generate strong cash flow, which has allowed us to opportunistically pay down debt. Todd will discuss this topic in more detail in his section, but suffice it to say we're pleased with our current financial position. In addition to making ongoing organic investments in our business growth, we are constantly surveying the market for intriguing acquisition opportunities that will help us achieve long-term growth. While the market remains relatively quiet, we are still looking for opportunities that help expand and diversify our product offering, gain exposure to new industries, and establish relationships with new blue-chip customers. Unlike many of our competitors today, should the right investment become available, we have the flexibility and meaningful capacity to pursue them given our fortified financial position. Overall, this quarter featured many positive developments, and we're doing a good job of adapting our business to meet our customers' market needs and realities. We are very glad to see that most of our customers are progressing in their ramp-up of production. and encourage by the overall direction that our end markets are heading. In 2020, we recognize their 75th anniversary and honor our heritage as we continue to be focused on executing on everything in our control and delivering the highest quality, value and service to our customers when they need it the most. While some level of uncertainty will undoubtedly be part of the story in the near term, We are more optimistic today than at any point in the past 12 months and believe we are well positioned for the future. With that, I will pass on the call to Todd so he can discuss our financial performance. Todd?