Form 8-K/A - Current report: [Amend]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(AMENDMENT NO.1)

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 1, 2023

Mayville Engineering Company, Inc.

(Exact name of registrant as specified in its charter)

Wisconsin

001-38894

39-0944729

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

715 South Street, Mayville, Wisconsin 53050

(Address of principal executive offices, including zip code)

(920) 387-4500

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Common Stock, no par value

MEC

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

On July 1, 2023, Mayville Engineering Company, Inc. (the “Company”) filed a Current Report on Form 8-K (the Original Form 8-K) to report the consummation of its previously announced acquisition of Mid-States Aluminum (MSA). This Amendment No. 1 to the Original Form 8-K amends and supplements Item 9.01 of the Original Form 8-K to provide the historical audited financial statements of MSA and the unaudited pro form condensed combined financial information of the Company pursuant to Items 9.01(a) and 9.01(b) of Form 8-K that were excluded from the Original Form 8-K in reliance on the instructions to such items. Except as noted in this paragraph, no other information contained in the Original Form 8-K is amended or supplemented.

Item 9.01.Financial Statements and Exhibits.

(a)

Financial Statements of Business Acquired

The financial statements for MSA required by Item 9.01(a) of Form 8-K are attached as Exhibit 99.1 and Exhibit 99.2 to this Amendment No.1 and incorporated herein by reference.

(b)

Pro Forma Financial Information

The unaudited pro forma condensed financial information for MSA required by Item 9.01(b) of Form 8-K is attached as Exhibit 99.3 to this Amendment No. 1 to the Original Form 8-K and incorporated herein by reference.

(c)

Not applicable.

(d)

Exhibits. The exhibits listed in the exhibit index below are being filed herewith.

EXHIBIT INDEX


Exhibit Number		Description

23.1		Consent of Wipfli LLP, Independent Registered Public Accounting Firm for Mid-States Aluminum

99.1		The audited Financial Statements of Mid-States Aluminum as of and for the year ended December 31, 2022, and the related notes thereto.

99.2		The unaudited Financial Statements of Mid-States Aluminum as of and for the six months ended June 30, 2023, and the related notes thereto.

99.3		The unaudited Pro Forma Condensed Combined Financial Information of Mayville Engineering Company, Inc as of and for the six months ended June 30, 2023, and the twelve-months ended December 31, 2022, and the related notes thereto.

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to report to be signed on its behalf by the undersigned thereunto duly authorized.


	MAYVILLE ENGINEERING COMPANY, INC.

Date: September 12, 2023
	By:	/s/ Todd M. Butz
		Todd M. Butz
		Chief Financial Officer

Exhibit 23.1

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statement Nos. 333-260759, 333-234506 and 333-234505 on Form S-8 of Mayville Engineering Company, Inc. of our report dated March 15, 2023, relating to the financial statements of Mid-States Aluminum Corp. as of and for the year ended December 31, 2022 appearing in this Current Report on Form 8-K/A.

/s/ Wipfli LLP

Appleton, Wisconsin

September 12, 2023

Exhibit 99.1

Mid-States Aluminum Corp.

Financial Statements

Year Ended December 31, 2022

Table of Contents


	Page
Independent Auditor’s Report	2

FINANCIAL INFORMATION	4

Financial Statements (Audited)	4

Balance Sheet	4

Statement of Income	5

Statement of Stockholders’ Equity	6

Statement of Cash Flows	7

Notes to Audited Financial Statements	8

Independent Auditor’s Report

Board of Directors

Mid-States Aluminum Corp.

Fond du Lac, Wisconsin

Opinion

We have audited the accompanying financial statements of Mid-States Aluminum Corp., which comprise the balance sheet as of December 31, 2022, and the related statements of income, stockholders’ equity, and cash flows for the year then ended, and the related notes to the financial statements.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mid-States Aluminum Corp. as of December 31, 2022, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (“GAAS”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Mid-States Aluminum Corp. and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with GAAP, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Mid-States Aluminum Corp.’s ability to continue as a going concern for one year after the date the financial statements are available to be issued.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not absolute assurance and, therefore, is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

●

Exercise professional judgment and maintain professional skepticism throughout the audit.

●

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

●

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Mid-States Aluminum Corp.’s internal control. Accordingly, no such opinion is expressed.

●

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

●

Conclude whether, in our judgement, there are conditions or events, considered in the aggregate, that raise substantial doubt about Mid-States Aluminum Corp.’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

/s/ Wipfli LLP

March 15, 2023

Appleton, Wisconsin

Mid-States Aluminum Corp.

Balance Sheet

(in thousands)


	December 31,
	2022
ASSETS
Cash	$	10,580
Accounts receivable - Net		8,284
Current maturities of long-term notes receivable		27
Inventories - Net		7,920
Prepaid expenses and other		223
Total current assets		27,034
Property, plant and equipment - Net		21,320
Notes receivable		109
Right-of-use assets - Finance		77
Other		109
Total assets	$	48,649
LIABILITIES AND STOCKHOLDERS’ EQUITY
Notes payable - Bank and other	$	745
Lease liabilities - Finance		19
Accounts payable		3,147
Customer deposits		124
Distributions payable		3,350
Accrued expenses and other liabilities		3,159
Total current liabilities		10,544
Notes payable - Bank and other, less current maturities		7,301
Lease liabilities - Finance, less current maturities		59
Total liabilities		17,904
Total stockholders’ equity		30,745
Total	$	48,649

See accompanying notes to financial statements.

Mid-States Aluminum Corp.

Statement of Income

(in thousands)


	Twelve Months Ended
	December 31,
	2022
Net sales	$	94,107
Cost of sales		73,629
Gross profit		20,478
Selling, general, and administrative expenses		7,930
Income from operations		12,548
Interest income		42
Interest expense		(176)
Gain on disposal of property, plant, and equipment		16
Rental income		101
Other income		3
Net income	$	12,534

See accompanying notes to financial statements.

Mid-States Aluminum Corp.

Statement of Stockholders’ Equity

(in thousands, except share amounts)


	Common		Retained		Total Stockholders'
	Stock ⁽¹⁾		Earnings		Equity
Balance at January 1, 2022	$	2,006	$	21,787	$	23,793
Net income		—		12,534		12,534
Distributions		—		(5,582)		(5,582)
Balance at December 31, 2022	$	2,006	$	28,739	$	30,745

(1)	Common stock – No par value, 2,500 shares authorized, 1,240 shares issued and outstanding.

See accompanying notes to financial statements.

Mid-States Aluminum Corp.

Statement of Cash Flows

(in thousands)


	Twelve Months Ended
	December 31,
	2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	12,534
Adjustments to reconcile net income to net cash flows from operating activities:
Provision for depreciation and amortization		3,313
Amortized interest expense		6
Gain on disposal of property, plant, and equipment		(16)
Changes in operating assets and liabilities:
Accounts receivable		(374)
Inventories		(888)
Prepaid expenses and other		(29)
Other assets		74
Accounts payable		(1,207)
Customer deposits		(118)
Accrued expenses and other liabilities		(92)
Net cash flows from operating activities		13,203
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(3,600)
Issuance of note receivable		(95)
Collections on notes receivable		244
Proceeds from sale of property, plant, and equipment		24
Net cash flows from investing activities		(3,427)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on finance leases		(26)
Principal payments on long-term notes payable - Bank and other		(3,175)
Payments on deferred compensation		(75)
Distributions to stockholders		(3,832)
Net cash flows from financing activities		(7,108)
Net change in cash		2,668
Cash at beginning of year		7,912
Cash at end of year	$	10,580

See accompanying notes to financial statements.

Mid-States Aluminum Corp.

Notes to the Financial Statements

(in thousands)

Note 1. Summary of Significant Accounting Policies

Principal Business Activity

Mid-States Aluminum Corp. (the “Company”) custom manufactures extruded, fabricated, and anodized aluminum products. The Company grants unsecured credit to customers primarily in the Midwest.

Use of Estimates

The preparation of accompanying financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make certain estimates and assumptions regarding reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates.

The Company considers the reserve for self-funded health insurance claims to be a significant estimate. The reserve for health insurance claims is maintained at a level, which management believes is adequate to cover claims incurred during the year but not paid until after year-end. Management periodically evaluates the reserve using the Company’s past experience, known claims, and expected claim lag. It is reasonably possible the estimate will change in the near term, and the effect would be material to the financial statements.

Accounts Receivable and Credit Policy

Accounts receivable are uncollateralized customer obligations due on normal trade terms requiring payment within 30 days from the invoice date. Collections of accounts receivable are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices.

The carrying amount of accounts receivable is reduced by an allowance that reflects management’s best estimate of the amounts that will not be collected. Management reviews all accounts receivable balances and performs an assessment of current creditworthiness, including an estimate of the portion, if any, of the balance that will not be collected. The allowance for potential credit losses was $100 as of December 31, 2022, and is reflected as an offset to accounts receivable – net in the accompanying balance sheet. The Company had no bad debt expense in 2022.

Inventories

Inventories are valued at the lower of cost, determined on the first-in, first-out (FIFO) method, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

The Company adjusts inventory to its net realizable value through a reserve that is an estimate of excess and obsolete inventory. An allowance for obsolete inventory of approximately $150 at December 31, 2022 has been recorded and is reflected as an offset to inventories – net in the accompanying balance sheet.

Property, Plant, Equipment and Depreciation

Property, plant and equipment are valued at cost. Maintenance and repair costs are charged to expense as incurred. Gains or losses on disposition of property, plant, and equipment are reflected in income. Depreciation and amortization is computed on the straight-line method for financial reporting purposes, based on the estimated useful lives of the assets or lease term, if applicable.

ASC 842 Lease Accounting

The Company is a lessee in two noncancelable financing leases for a vehicle and office equipment. If the contract provides the Company the right to substantially all the economic benefits and the right to direct the use of the identified asset, it is considered to be or contain a lease. Right-of-use (ROU) assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the expected lease term. The ROU asset is also adjusted for any lease prepayments made, lease incentives received, and initial direct costs incurred.

The lease liability is initially and subsequently recognized based on the present value of its future lease payments. Variable payments are included in the future lease payments when those variable payments depend on an index or a rate. Increases (decreases) to variable lease payments due to subsequent changes in an index or rate are recorded as variable lease expense (income) in the future period in which they are incurred.

The discount rate used for the vehicle lease is the implicit rate in the lease contract, as it is readily determinable. For the office equipment lease, the Company has elected to use a risk-free rate for a term similar to the underlying lease as the discount rate, if the implicit rate in the lease contract is not readily determinable.

The ROU asset for finance leases is amortized on a straight-line basis over the lease term.

For all underlying classes of assets, the Company has elected to not recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease commencement and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. Leases containing termination clauses in which either party may terminate the lease without cause and the notice period is less than 12 months are deemed short-term leases with lease costs included in short-term lease expense. The Company recognizes short-term lease cost on a straight-line basis over the lease term.

The Company made an accounting policy election for all classifications of leases to not separate the lease components of a contract and its associated non-lease components related to maintenance and license fees.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability would be performed. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets being evaluated, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets. During 2022, the Company determined that no evaluation of recoverability was necessary.

Debt Issuance Costs

Unamortized debt issuance costs have been recorded as a reduction to the related debt obligation. Debt issuance costs are being amortized to interest expense over the maximum term provided in the debt agreement using a straight-line method.

Revenue Recognition

The Company’s contract revenues are primarily generated from the sale of extruded, fabricated, and anodized aluminum products. The Company also generates revenue from the sale of scrap of their aluminum products. The Company’s contracts have one performance obligation, which is providing customers with the goods ordered. The Company recognizes revenue for financial reporting purposes at a point in time when the obligations under the terms of the contract with the customer are satisfied and the control is transferred to the customer. Control transfers to the customer at the time of shipment as all contracts are free on board shipping point.

The Company provides a general warranty regarding the condition of the product, which is deemed to be an assurance warranty. Management estimates any liability for warranty claims would not be material at year-end.

The Company’s stable customer base results in relatively minimal variability in expected cash flows and the recognition of revenue among its customers. All customers are subject to a review of creditworthiness as further explained in the accounts receivable and credit policy. The most significant economic factors that impact the nature, amount, timing, and uncertainties of the Company’s revenues and cash flows is the aluminum commodity market, as well as the industries in which the Company’s customers operate.

Net sales are measured as the amount of consideration the Company expects to receive in exchange for transferring goods to the customer. The amount of consideration can vary, primarily because of return rights the Company offers to customers. These items are treated as a reduction to sales. An accrual for expected product returns is recorded at the time of sale based on the expected value of total consideration to which customers are likely to be entitled based on historical experience. Included in the estimate is an assessment as to whether any variable consideration is constrained. The reserve for product returns is $90 as of December 31, 2022 and is included in accrued expenses and other liabilities on the accompanying balance sheet.

When the Company enters into contracts with its customers, it generally expects there to be no significant timing difference between the date the performance obligation is satisfied and the date cash consideration is received. Accordingly, there is no financing component to the Company’s arrangement with customers.

The shipment of products to customers is considered a fulfillment activity and amounts billed to customers for shipping and handling are included in net sales and the related costs are included in cost of sales on the accompanying statement of income.

The Company presents taxes collected and remitted to governmental authorities on the net basis, excluding such amounts from revenue.

Contract liabilities include customer deposits. Some customers are required under the terms of the contract to prepay a specified amount of the total contract price. The Company records the customer deposit as a contract liability at inception. When transfer of control of the related product occurs, the Company reclassifies the liability and recognizes the revenue on the deposit.

Opening and closing balances for accounts receivable and the contract liability arising from contracts with customers include:


	December 31,		January 1,
	2022		2022
Accounts receivable	$	8,384	$	8,010
Contract liability - Customer deposits	$	124	$	241

Income Taxes

The Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code and comparable state regulations. Under these provisions, the Company does not pay federal or state corporate income taxes on its taxable income (nor is it allowed a net operating loss carryback or carryover as a deduction). Instead, the stockholders report on their personal income tax returns their proportionate share of the Company’s taxable income or loss and tax credits. The Company is committed to distribute funds sufficient to reimburse the stockholders for income taxes resulting from reporting the Company’s taxable income on their personal tax returns.

The federal and state income tax returns remain open to examination by taxing authorities through their statutory periods.

Future Accounting Pronouncement

Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments, will require the Company to present financial assets measured at amortized cost (including trade receivables) at the net amount expected to be collected over their remaining contractual lives. Estimated credit losses will be based on relevant information about historical experience, current conditions, and reasonable and supportable forecasts issued for interim and annual periods beginning after December 15, 2022. The Company is evaluating what impact this new standard will have on its 2023 financial statements.

Subsequent Events

Subsequent events have been evaluated through March 15, 2023, which is the date the financial statements were available to be issued.

Note 2. Accounting Pronouncement Adopted

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 is intended to improve financial reporting of leasing transactions by requiring organizations that lease assets to recognize assets and liabilities for the rights and obligations created by leases on the balance sheet. This accounting update also requires additional disclosures surrounding the amount, timing, and uncertainty of cash flows arising from leases. The Company adopted this guidance for the year ended December 31, 2022 with modified retrospective application to January 1, 2022 through a cumulative-effect adjustment. The Company did not reassess service contracts evaluated for lease treatment under ASC 840 for embedded leases under ASC 842.

As a result of the adoption of the new lease accounting guidance, the Company recognized the following ROU assets and lease liabilities as of January 1, 2022:


ROU assets - Finance leases	$	104
Lease obligation - Finance leases	$	104

This standard did not have a material impact on the Company’s equity or cash flows from operations and had an immaterial impact on the Company’s operating results. The most significant impact was the recognition of the ROU assets and lease obligations for finance leases.

Note 3. Inventories

Inventories consisted of the following at December 31, 2022:


At current costs:
Raw materials	$	4,108
Work in process		2,166
Finished goods		1,764
Scrap		32
Total at current cost		8,070
Less: Allowance for obsolete inventory and lower of cost or net realizable value		150
Total	$	7,920

Note 4. Property, Plant, and Equipment

Property, plant, and equipment consisted of the following at December 31, 2022:


Land	$	118
Land improvements		1,453
Buildings		16,318
Machinery and equipment		38,790
Vehicles		469
Furniture and office equipment		2,087
Total		59,235
Less: Accumulated depreciation		38,150
Net depreciated value		21,085
Construction in progress		235
Property, plant and equipment - Net	$	21,320

Depreciation expense on property, plant and equipment was $3,286 for 2022. Amortization expense on finance leases was $27 in 2022.

Note 5. Notes Receivable

Notes receivable consisted of the following at December 31, 2022:


Related Party
Unsecured note with an employee, monthly installments of $2, including
interest at 5.00% per year, due in June 2030	$	126
Other
Third party note, secured by a purchase money security interest in equipment,
monthly payments of $10, including interest at 1.80%, due in January 2023		10

Total notes receivable	$	136
Less: Current maturities		27
Long-term portion	$	109

The Company recorded interest income of $7 in 2022 on the related party note above. There was no interest receivable related to the related party note as of December 31, 2022.

Required payments of principal on the notes receivable at December 31, 2022, including current maturities, are summarized as follows:


2023	$	27
2024		18
2025		19
2026		19
2027		21
Thereafter		32
Total	$	136

Note 6. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following at December 31, 2022:


Compensation and related taxes	$	2,122
Health insurance		619
Real estate taxes		160
Interest		22
Commissions		95
Other		141
Total	$	3,159

Note 7. Line of Credit

The Company has a $4,000 line of credit available with a bank. No advances were outstanding as of December 31, 2022. The line of credit bears interest at the one-month secured overnight financing rate (SOFR) plus 2.04% with a floor of 3.25% (6.34% at December 31, 2022). The line of credit is secured by a general business security agreement and specific equipment and expires in June 2023.

Note 8. Long-Term Notes Payable – Bank and Other

Long-term notes payable – bank and other consisted of the following at December 31, 2022:


Fond du Lac County ⁽¹⁾	$	2,875
City of Fond du Lac ⁽²⁾		189
Small Business Administration ⁽³⁾		5,114
Total		8,178
Less: Unamortized debt issuance costs		132
Less: Current maturities		745
Long-term portion	$	7,301

Fond du Lac County and the Fond du Lac County Economic Development Corporation term note, secured by a security agreement, payable in annual installments of $500 plus interest at 2.00%, due in full in December 2028.

City of Fond du Lac Economic Development Revolving Loan Fund term note, secured by a general business security agreement, payable in monthly installments of $3, including interest at 2.00%, due in full in April 2028.

Small Business Administration (SBA) loan, secured by specific equipment and an unlimited guarantee by two stockholders of the Company, payable in monthly installments of $27, including interest at 1.17%, due in full in September 2045.

The Company had a bank term note, secured by a general business security agreement and specific equipment, payable in monthly installments of $40, including interest at 3.88%. Note was paid in full during 2022.

The line of credit in Note 7 and the bank term note are supported by a loan agreement that provides, among other matters, certain restrictive covenants, including a minimum net worth.

Required payments of principal on long-term notes payable – bank and other at December 31, 2022, including current maturities, are summarized as follows:


2023	$	745
2024		748
2025		753
2026		738
2027		742
Thereafter		4,452
Total	$	8,178

Note 9: Leases

Lessee

The Company leases include leases for office equipment and a vehicle. The office equipment lease entered into includes an option to renew by unlimited one-month increments. The vehicle lease contains no renewal option language. The exercise of lease renewal options is at the Company’s sole discretion. Renewal option periods are included in the measurement of the ROU asset and lease liability when the exercise is reasonably certain to occur. The Company is not reasonably certain to exercise renewal options on the office equipment.

The depreciable life of assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Payments due under the lease contracts include fixed payments plus variable payments. The Company’s leases require it to make variable payments for additional maintenance and mileage charges. These variable lease payments are not included in lease payments used to determine the lease liability and are recognized as variable costs when incurred.

Components of lease expense were as follows for the year ended December 31, 2022:


Finance lease cost:
Amortization of ROU assets	$	27
Interest on lease liabilities		4
Variable lease cost		8
Total lease cost	$	39

Other Information is as follows for the year ended December 31, 2022:


Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	4
Financing cash flows from finance leases	$	25

Weighted-average remaining lease term - Finance leases		3.94 years
Weighted-average discount rate - Finance leases		5.18%

Maturities of lease liabilities are as follows as of December 31, 2022:


2023	$	23
2024		22
2025		21
2026		21
Total lease payments		87
Less imputed interest		9
Total	$	78

Lessor

In March 2022, the Company purchased a building and is leasing the building to a third party tenant under a noncancelable operating lease agreement. Payments on the lease are $8 per month through June 2023. The lease requires the lessee to make variable payments for the lessee’s proportionate share of property taxes, insurance, and utilities. Rental income was $101 in 2022. Future minimum rent to be received by the Company under the noncancelable operating lease agreement is $51 in 2023.

Note 10. Retirement Plan

The Company maintains a defined contribution 401(k) plan that covers substantially all employees. At discretion of the Board of Directors, the Company may elect to make annual matching and profit sharing contributions. For 2022, the Company matched 40% of employee contributions, subject to certain Internal Revenue Service limitations. The discretionary matching contributions to the plan were approximately $411 in 2022. The Company did not make any discretionary profit sharing contributions in 2022.

Note 11. Deferred Compensation

In 2005, the Company had entered into an Employee Equity Growth Plan agreement and a deferred compensation agreement with a key employee. The agreement provides for 60 monthly payments of $8, which began upon the key employee’s retirement date in October 2017. The Company made final payments of $75 in 2022 under this agreement.

There was no deferred compensation expense in 2022.

Note 12. Self-Insured Health Insurance

The Company has a self-funded health care plan which provides medical benefits to eligible employees and their dependents. The health care costs are expensed as incurred. The health care expense is based upon actual claims paid, premiums, reinsurance premiums, and administration fees, and estimated unpaid claims at year-end. The Company buys reinsurance to cover catastrophic individual claims over $100.

Health care expense was approximately $2,971 for 2022. A liability has been recorded for claims outstanding in the amount of $619 at December 31, 2022. Management believes this liability is sufficient to cover estimated claims, including claims incurred but not yet reported.

Note 13. Stock Restriction Agreement

The Company has entered into agreements with two of its minority stockholders to purchase all of their respective shares of common stock upon their deaths. The agreement also provides for the right of first refusal by the Company, then its other stockholders, in the event of a sale of the respective shares of common stock by either minority stockholder.

Note 14. Major Customer

In 2022, one major customer accounted for 16% of net sales aggregating approximately $15,099. The Company did not have an outstanding balance in accounts receivable from this customer at December 31, 2022.

Note 15. Concentration of Credit Risk

The Company maintains its cash in bank deposit accounts at a financial institution. The balances, at times, may exceed federally insured limits.

Note 16. Contingencies

In the ordinary course of conducting business, the Company occasionally becomes involved in legal proceedings relating to contracts, environmental issues, or other matters. While any proceeding or litigation has an element of uncertainty, management of the Company believes that the outcome of any pending or threatened actions will not have a material adverse effect on the business or financial condition of the Company.

The Company received full forgiveness from the SBA on its Paycheck Protection Program loan in the amount of $3,300 in June 2021. The SBA has the right to review funding eligibility and usage of funds for compliance within the program requirements for up to six years from the date the forgiveness was granted. The amount of the liability, if any, from potential noncompliance cannot be determined with certainty; however, management believes that any review will not have a material adverse impact on the Company’s financial position.

Note 17. Cash Flow Disclosures


	Year Ended
	December 31,
	2022
Supplemental cash flow information:
Cash paid during the year for interest	$	182
Noncash investing and financing activities:
Property, plant, and equipment purchases included in accounts payable	$	1
Distributions declared and accrued	$	3,350

Exhibit 99.2

Mid-States Aluminum Corp.

Interim Financial Statements

Six months Ended June 30, 2023

Table of Contents


	Page
FINANCIAL INFORMATION	2

Financial Statements (Unaudited)	2

Condensed Balance Sheet	2

Condensed Statement of Income	3

Condensed Statement of Cash Flows	4

Condensed Statement of Stockholders’ Equity	5

Notes to Unaudited Condensed Financial Statements	6

Mid-States Aluminum Corp.

Condensed Balance Sheet

(in thousands)

(unaudited)


	June 30,
	2023
ASSETS
Cash	$	324
Accounts receivable - Net		7,381
Inventories - Net		8,847
Prepaid expenses and other		133
Total current assets		16,685
Property, plant and equipment - Net		19,970
Right-of-use assets - Finance		144
Other		167
Total assets	$	36,966
LIABILITIES AND STOCKHOLDERS’ EQUITY
Notes payable - Bank and other	$	697
Lease liabilities - Finance		36
Accounts payable		2,267
Customer deposits		204
Accrued expenses and other liabilities		3,035
Total current liabilities		6,239
Notes payable - Bank and other, less current portion		7,058
Lease liabilities - Finance, less current maturities		115
Total liabilities		13,412
Total stockholders’ equity		23,554
Total	$	36,966

The accompanying notes are an integral part of these Condensed Financial Statements.

Mid-States Aluminum Corp.

Condensed Statement of Income

(in thousands)

(unaudited)


	Six Months Ended
	June 30,
	2023
Net sales	$	32,989
Cost of sales		26,048
Gross profit		6,941
Selling, general, and administrative expenses		5,545
Income from operations		1,396
Interest income		59
Interest expense		(69)
Loss on disposal of property, plant, and equipment		(106)
Rental income		30
Net income	$	1,310

The accompanying notes are an integral part of these Condensed Financial Statements.

Mid-States Aluminum Corp.

Condensed Statement of Cash Flows

(in thousands)

(unaudited)


	Six Months Ended
	June 30,
	2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,310
Adjustments to reconcile net income to net cash flows from operating activities:
Provision for depreciation and amortization		1,654
Amortized interest expense		3
Loss on disposal of property, plant, and equipment		106
Changes in operating assets and liabilities:
Accounts receivable		903
Inventories		(927)
Prepaid expenses and other		90
Other assets		(58)
Accounts payable		(895)
Customer deposits		80
Accrued expenses and other liabilities		(124)
Net cash provided by operating activities		2,142
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(372)
Collections on notes receivable		136
Net cash used in investing activities		(236)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on finance leases		(17)
Principal payments on long-term notes payable - Bank and other		(294)
Distributions to stockholders		(11,851)
Net cash provided by financing activities		(12,162)
Net decrease in cash		(10,256)
Cash at beginning of period		10,580
Cash at end of period	$	324

The accompanying notes are an integral part of these Condensed Financial Statements.

Mid-States Aluminum Corp.

Condensed Statement of Stockholders’ Equity

(in thousands, except share amounts)

(unaudited)


	Stockholders' Equity
	Common		Retained		Stockholders'
	Stock ⁽¹⁾		Earnings		Equity
Balance at December 31, 2022	$	2,006	$	28,739	$	30,745
Net income		—		1,310		1,310
Distributions		—		(8,501)		(8,501)
Balance at June 30, 2023	$	2,006	$	21,548	$	23,554

(1)

Common stock – No par value, 2,500 shares authorized, 1,240 shares issued and outstanding.

The accompanying notes are an integral part of these Condensed Financial Statements.

Mid-States Aluminum Corp.

Notes to the Unaudited Condensed Financial Statements

(in thousands except share amounts, years and ratios)

(unaudited)

Note 1. Basis of presentation

The interim unaudited condensed financial statements of Mid-States Aluminum Corp. (MSA, the Company, we, our, us or similar terms) presented here have been prepared in accordance with the accounting principles generally accepted in the United States of America (GAAP). They reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations and financial position for the interim unaudited period presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These interim unaudited Condensed Financial Statements should be read in conjunction with the Company’s financial statements and notes thereto for the year ended December 31, 2022, included in the Current Form 8-K/A as Exhibit 99.1. A summary of the Company’s significant accounting policies is included in the Company’s 2022 financial statements in Exhibit 99.1 in the Current Form 8-K/A. The Company followed these policies in preparation of the interim unaudited Condensed Financial Statements except for new accounting pronouncements adopted as described below.

Nature of Operations

MSA custom manufactures extruded, fabricated, and anodized aluminum products.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016 13, Measurement of Credit Losses on Financial Instruments, which establishes Accounting Standards Codification (ASC) 326, Financial Instruments – Credit Losses. The ASU revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. The ASU affects trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash for interim and annual periods beginning after December 15, 2022. The Company adopted the new standard as of January 1, 2023. As our customer base is principally made of blue-chip OEMs with high credit ratings and our trade receivables are due within one year or less, the adoption of this standard did not have a material impact on our financial statements.

Note 2. Inventories

Inventories consisted of the following at June 30, 2023:


At current costs:
Raw materials	$	4,421
Work in process		2,015
Finished goods		2,525
Scrap		36
Totals at current cost		8,997
Less: Allowance for obsolete inventory and lower of cost or net realizable value		150
Totals	$	8,847

Note 3. Property, Plant, and Equipment

Property, plant, and equipment consisted of the following at June 30, 2023:


Land	$	118
Land improvements		1,453
Buildings		16,508
Machinery and equipment		39,004
Vehicles		254
Furniture and office equipment		2,091
Totals		59,428
Less accumulated depreciation		39,601
Net depreciated value		19,827
Construction in progress		143
Total property, plant and equipment	$	19,970

Depreciation expense on property, plant, and equipment was $1,632 for the six months ended June 30, 2023. Amortization expense on finance leases was $22 for the six months ended June 30, 2023.

Note 4. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following at June 30, 2023:


Compensation and related taxes	$	1,902
Health insurance		554
Real estate taxes		161
Interest		56
Commissions		98
Other		264
Totals		3,035

Note 5. Line of Credit

The Company has a $4,000 line of credit available with a bank. No advances were outstanding as of June 30, 2023. The line of credit bears interest at the one-month Secured Overnight Financing Rate (SOFR) plus 2.04% with a floor of 3.25% (7.09% at June 30, 2023). The line of credit in is supported by a loan agreement that provides, among other matters, certain restrictive covenants, including a minimum net worth.

Note 6. Long-Term Notes Payable – Bank and Other

Long-term notes payable – bank and other consisted of the following at June 30, 2023:


Fond du Lac County ⁽¹⁾	$	2,875
Small Business Administration ⁽²⁾		5,009
Totals		7,884
Less: Unamortized debt issuance costs		129
Less: Current maturities		697
Long-term portion	$	7,058

(1)

Fond du Lac County and the Fond du Lac Economic Development Corporation term note, secured by a security agreement, payable in annual installments of $500 plus interest at 2.00%, due in full in December 2028.

(2)

Required payments of principal on long-term notes payable – bank and other at June 30, 2023, including current maturities, are summarized as follows:


2023	$	606
2024		713
2025		718
2026		702
2027		705
Thereafter		4,440
Totals	$	7,884

Note 7. Leases

Lessee

The depreciable life of assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Components of lease expense were as follows for the six months ended June 30, 2023:


Finance lease cost:
Amortization of ROU assets	$	18
Interest on lease liabilities		4
Variable lease cost		2
Total lease cost	$	24

Other information is as follows for the six months ended June 30, 2023:


Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	22
Financing cash flows from finance leases		(17)

Weighted-average remaining lease term - Finance leases		3.92 years
Weighted-average discount rate - Finance leases		4.42%

Maturities of lease liabilities is as follows for the six months ended June 30, 2023:


2023	$	21
2024		42
2025		42
2026		42
2027		17
Total lease payments		164
Less imputed interest		13
Total	$	151

Lessor

In March 2022, the Company purchased a building and is leasing the building to a third party tenant under a noncancelable operating lease agreement. Payments on the lease are $8 per month through June 2023. The lease requires the lessee to make variable payments for the lessee’s proportionate share of property taxes, insurance, and utilities. Rental income was $30 for the six months ended June 30, 2023. The lease agreement was not renewed with the third party tenant moving out of the building at the end of June 2023.

Note 8. Retirement Plan

The Company maintains a defined contribution 401(k) plan that covers substantially all employees. At discretion of the Board of Directors, the Company may elect to make annual matching and profit sharing contributions. For 2023, the Company matched 40% of employee contributions, subject to certain Internal Revenue Service limitations. The discretionary matching contributions to the plan were approximately $235 for the six months ended June 30, 2023. The Company did not make any discretionary profit sharing contributions in 2023.

Note 9. Income Taxes

sufficient to reimburse the stockholders for income taxes resulting from reporting the Company’s taxable income on their personal tax returns.

The federal and state income tax returns remain open to examination by taxing authorities through their statutory periods.

Note 10. Self-Insured Health Insurance

The Company has a self-funded health care plan which provides medical benefits to eligible employees and their dependents. The health care costs are expensed as incurred. The health care expense is based upon actual claims paid, premiums, reinsurance premiums, and administration fees, and estimated unpaid claims at June 30, 2023. The Company buys reinsurance to cover catastrophic individual claims over $100.

Health care expense was approximately $1,156 for the six months ended June 30, 2023. A liability has been recorded for claims outstanding in the amount of $554 at June 30, 2023. Management believes this liability is sufficient to cover estimated claims, including claims incurred but not yet reported.

Note 11. Stock Restriction Agreement

Note 12. Revenue Recognition

The Company’s contract revenues are primarily generated from the sale of extruded, fabricated, and anodized aluminum products. The Company’s contracts have one performance obligation, which is providing customers with the goods ordered. The Company recognizes revenue for financial reporting purposes at a point in time when the obligations under the terms of the contract with the customer are satisfied and the control is transferred to the customer. Control transfers to the customer at the time of shipment as all contracts are free on board shipping point.

Opening and closing balances for accounts receivable and the contract liability arising from contracts with customers include:


	June 30,
	2023
Accounts receivable	$	7,483
Contract liability - Customer deposits	$	204

Note 13. Major Customers

As of June 30, 2023, the Company did not have any single customer account for more than 10% of its net sales. One customer accounted for 10.3% of accounts receivable, or approximately $760.

Note 14. Concentration of Credit Risk

The Company maintains its cash in bank deposit accounts at a financial institution. The balances, at times, may exceed federally insured limits.

Note 15. Contingencies

The Company received full forgiveness from the SBA on its Paycheck Protection Program loan in the amount of $3,300 in June 2021. The SBA has the right to review funding eligibility and usage of funds for compliance with the program requirements for up to six years from the date the forgiveness was granted. The amount of the liability, if any, from potential noncompliance cannot be determined with certainty; however, management believes that any review will not have a material adverse impact on the Company’s financial position.

Note 16. Cash Flow Disclosures


	June 30,
	2023
Supplemental cash flow information:
Cash paid during the year for interest	$	35
Noncash investing and financing activities:
Property, plant, and equipment purchases included in A/P	$	15

Note 17. Subsequent Events

The Company has evaluated subsequent events since June 30, 2023, the date of these financial statements. There were not material events or transactions discovered during this evaluation that requires recognition or disclosure in the financial statements.

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On July 1, 2023, Mayville Engineering Company, Inc. (MEC, the Company, we, our, us or similar terms) completed its acquisition (the Acquisition) of Mid-States Aluminum (MSA) for $90.0 million in cash, which included estimated adjustments for the amount of cash, indebtedness, net working capital, and certain expenses of MSA as of the closing, pursuant to the Unit Purchase Agreement, dated June 19, 2023. Prior to the closing of the Acquisition, MSA conducted a reorganization from a corporation to a limited liability company. MSA is a leading manufacturer of custom aluminum extrusions and fabrications that also offers related services including design, engineering, anodizing and finishing, assembly and packaging.

The Company financed the Acquisition by borrowing under its amended and restated credit agreement, dated as of June 28, 2023. The Company filed the amended and restated credit agreement with the Securities and Exchange Commission on June 29, 2023 as Exhibit 10 on Form 8-K dated June 28, 2023.

The following Unaudited Pro Forma Condensed Combined Financial Information was prepared in accordance with Regulation S-X under the Securities Act using accounting policies in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Unaudited Pro Forma Condensed Combined Financial Information (1) was prepared using the acquisition method of accounting in accordance with the business combination accounting guidance as provided in Accounting Standards Codification (ASC) 805, Business Combinations, the Company being the acquiring entity and (2) is based on the Company’s historical consolidated financial statements and MSA’s historical financial statements. In the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2023, it is assumed that the Acquisition occurred on June 30, 2023. In the Unaudited Pro Forma Condensed Combined Statements of Comprehensive Income for the six months ended June 30, 2023, and the twelve months ended December 31, 2022, it is assumed that the Acquisition occurred on January 1, 2022.

In accordance with ASC 805, we use our best estimates and assumptions to accurately assign fair value to the tangible assets acquired, identifiable intangible assets and liabilities assumed, and the related income tax impacts as of the Acquisition date. The estimate of the excess purchase price over the fair value of net tangible assets acquired was allocated to identifiable intangible assets and goodwill. The fair values assigned to MSA’s tangible and identifiable intangible assets acquired and liabilities assumed are based on the Company’s estimates and assumptions. The estimated fair values of these assets acquired, and liabilities assumed are considered preliminary and are based on the information that was available as of the date of the Acquisition. In the opinion of the Company’s management, the Unaudited Pro Forma Condensed Combined Financial Information includes all material adjustments necessary to be in accordance with Article 11 of Regulation S-X under the Securities Act.

The Company’s historical financial statements have been adjusted in the Unaudited Pro Forma Condensed Combined Financial Information to give effect to Pro Forma events that are (1) directly attributable to the Acquisition, (2) factually supportable and (3) expected to have a continuing impact on the combined results of the Company after the Acquisition. The purchase price allocation reflected in the following Unaudited Pro Forma Condensed Combined Financial Information is preliminary in nature as the final, actual purchase price and certain valuations have not been finalized. Accordingly, although these amounts represent Company management’s current best estimate of fair value, the final purchase price allocation may differ materially from the preliminary allocation utilized in the following Unaudited Pro Forma Condensed Combined Financial Information. In addition, the Unaudited Pro Forma Condensed Combined Statement of Comprehensive Income Information includes various estimates which are subject to material change and may not be indicative of what may be expected to occur in the future. The Pro Forma adjustments are described in the accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information.

The Unaudited Pro Forma Condensed Combined Financial Information is presented for informational purposes only. Such information is not necessarily indicative of the operating results or financial position that actually would have been achieved if the Acquisition had been consummated on the dates indicated or that the combined company may achieve in future periods. Further, the Unaudited Pro Forma Condensed Combined Financial Information does not reflect any revenue and operating synergies or cost savings that may result from the Acquisition.

Unaudited Pro Forma Condensed Combined Financial Information is based upon, and should be read in conjunction with:

●

Accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information;

●

The Company’s historical financial statements included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2022 and in the Company’s Quarterly Report on Form 10-Q as of and for the six months ended June 30, 2023; and

●

MSA’s historical financial statements included within this Current Report on Form 8-K as Exhibits 99.1 and 99.2 as of and for the year ended December 31, 2022 and as of and for the six months ended June 30, 2023, respectively.

Mayville Engineering Company, Inc. and Subsidiaries

Unaudited Pro Forma Condensed Combined Balance Sheet

June 30, 2023

(in thousands)


			Mid-States
	Mayville		Aluminum
	Engineering		After Reclassifications		Pro Forma		Note Ref.	Pro Forma
	Company		(See Note 3)		Adjustments		(See Note 4)	Combined
ASSETS
Cash and cash equivalents	$	90,125	$	324	$	(90,002)	[a]	$	447
Receivables, net of allowances for doubtful accounts		69,066		7,381		—			76,447
Inventories, net		66,828		8,847		891	[b]		76,566
Tooling in progress		7,827		—		—			7,827
Prepaid expenses and other current assets		4,360		262		—			4,622
Total current assets		238,206		16,814		(89,111)			165,909
Property, plant and equipment, net		141,326		20,114		21,157	[b]		182,597
Assets held for sale		81		—		—			81
Goodwill		71,535		—		21,800	[b]		93,335
Intangible assets, net		40,333		—		22,600	[b]		62,933
Operating lease assets		33,929		—		—			33,929
Other long-term assets		3,192		167		—			3,359
Total assets	$	528,602	$	37,095	$	(23,554)		$	542,143
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	52,354	$	2,279	$	—		$	54,633
Current portion of operating lease obligation		5,017		—		—			5,017
Current portion of long-term debt		—		697		(212)	[c]		485
Accrued liabilities:									—
Salaries, wages, and payroll taxes		8,229		1,441		—			9,670
Profit sharing and bonus		1,499		461		—			1,960
Current portion of deferred compensation		273		—		—			273
Other current liabilities		11,333		1,361		—			12,694
Total current liabilities		78,705		6,239		(212)			84,732
Bank revolving credit notes		177,943		—		5,009	[c]		182,952
Other long-term debt, less current maturities		—		7,187		(4,797)	[c]		2,390
Operating lease obligation, less current maturities		29,745		—		—			29,745
Deferred compensation, less current portion		3,446		—		—			3,446
Deferred income tax liability		12,710		—		—			12,710
Other long-term liabilities		684		115		—			799
Total liabilities	$	303,233	$	13,541	$	—		$	316,774
Total shareholders’ equity		225,369		23,554		(23,554)	[d]		225,369
Total	$	528,602	$	37,095	$	(23,554)		$	542,143

The accompanying notes are an integral part of these Condensed Combined Financial Statements

Mayville Engineering Company, Inc. and Subsidiaries

Unaudited Pro Forma Condensed Combined Statement of Comprehensive Income

For the Six Months Ended June 30, 2023

(in thousands, except share amounts and per share data)


			Mid-States
	Mayville		Aluminum
	Engineering		After Reclassifications		Pro Forma		Note Ref.	Pro Forma
	Company		(See Note 3)		Adjustments		(See Note 4)	Combined
Net sales	$	281,626	$	30,956	$	—		$	312,582
Cost of sales		249,154		23,936		(98)	[e]		272,992
Amortization of intangible assets		3,476		—		871	[f]		4,347
Profit sharing, bonuses, and deferred compensation		5,690		235		—			5,925
Other selling, general and administrative expenses		14,363		5,406		—			19,769
Income from operations		8,943		1,379		(773)			9,549
Interest expense		(3,626)		(69)		(3,460)	[g]		(7,155)
Loss on extinguishment of debt		(216)		—		—			(216)
Income before taxes		5,101		1,310		(4,233)			2,178
Income tax expense (benefit)		916		—		(914)	[h]		2
Net income (loss) and comprehensive income (loss)	$	4,185	$	1,310	$	(3,319)		$	2,176

Earnings per share:
Basic	$	0.21						$	0.11
Diluted	$	0.20						$	0.10

Weighted average shares outstanding:
Basic		20,405,383							20,405,383
Diluted		20,789,175							20,789,175

The accompanying notes are an integral part of these Condensed Combined Financial Statements

Mayville Engineering Company, Inc. and Subsidiaries

Unaudited Pro Forma Condensed Combined Statement of Comprehensive Income

For the Twelve Months Ended December 31, 2022

(in thousands, except share amounts and per share data)


			Mid-States
	Mayville		Aluminum
	Engineering		After Reclassifications		Pro Forma		Note Ref.	Pro Forma
	Company		(See Note 3)		Adjustments		(See Note 4)	Combined
Net sales	$	539,392	$	85,603	$	—		$	624,995
Cost of sales		478,323		64,748		(219)	[i]		542,852
Amortization of intangible assets		6,952		—		1,741	[j]		8,693
Profit sharing, bonuses, and deferred compensation		7,997		411		—			8,408
Other selling, general and administrative expenses		24,692		7,734		—			32,426
Impairment of long-lived assets and gain on contracts		(4,346)		—		—			(4,346)
Income from operations		25,774		12,710		(1,522)			36,962
Interest expense		(3,380)		(176)		(6,921)	[k]		(10,477)
Income before taxes		22,394		12,534		(8,443)			26,485
Income tax expense		3,667		—		330	[l]		3,997
Net income (loss) and comprehensive income (loss)	$	18,727	$	12,534	$	(8,773)		$	22,488

Earnings per share:
Basic	$	0.92						$	1.10
Diluted	$	0.91						$	1.09

Weighted average shares outstanding:
Basic		20,399,737							20,399,737
Diluted		20,682,628							20,682,628

The accompanying notes are an integral part of these Condensed Combined Financial Statements

Mayville Engineering Company, Inc. and Subsidiaries

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

(in thousands, except share amounts, per share data and years)

Note 1. Description of Transaction and Basis of Presentation

On July 1, 2023, the Company acquired all of the issued and outstanding limited liability interests of MSA. The Acquisition was consummated in accordance with the terms and conditions of that certain Unit Purchase Agreement, dated as of June 19, 2023, among the Company and the shareholders of MSA, following a reorganization of MSA from a corporation to a limited liability company. The purchase price in the Acquisition was $95,945, subject to adjustments for the amount of cash, indebtedness, net working capital and certain expenses of MSA as of the closing. At the closing of the Acquisition, the Company applied an estimate of the adjustments and paid total net consideration of $90,002. The Company financed the Acquisition by borrowing under its amended and restated credit agreement, dated as of June 28, 2023.

The Pro Forma adjustments to the Unaudited Pro Forma Condensed Combined Financial Information is based on historical consolidated financial statements of the Company and the historical financial statements of MSA. The Pro Forma adjustments eliminate transactions between Mayville Engineering Company, Inc. and Mid-States Aluminum using balances as of June 30, 2023 and conform the accounting principles of MSA to those of the Company in preparing the Unaudited Pro Forma Condensed Combined Financial Information.

The Unaudited Pro Forma Condensed Combined Financial Information was prepared using the acquisition method of accounting in accordance with the business combination accounting guidance as provided in ASC 805, Business Combinations, with Mayville Engineering Company, Inc being the acquiring entity, and reflects estimates and assumptions deemed appropriate by the Company’s management. In the opinion of the Company’s management, the Unaudited Pro Forma Condensed Combined Financial Information includes all material adjustments necessary to be in accordance with Article 11 of Regulation S-X under the Securities Act.

Note 2. Preliminary Purchase Price Allocation

For the Unaudited Pro Forma Condensed Combined Balance Sheet, the $90,002 purchase price was allocated based on financial information and the Company’s preliminary estimate of the fair value of the assets acquired and liabilities assumed as of the Acquisition date. The following table summarizes the allocation of the preliminary purchase price:


	Preliminary
	Opening Balance
	Sheet Allocation
Cash	$	324
Accounts receivable, net		7,381
Inventory		9,738
Property, plant and equipment		41,271
Other assets		429
Intangible assets
Developed technology (7-year estimated useful life)		4,900
Customer relationships (17-year estimated useful life)		17,700
Goodwill		21,800
Total assets acquired		103,543
Accounts payable		(2,279)
Accrued expenses		(1,441)
Other liabilities		(1,937)
Debt		(7,884)
Total consideration	$	90,002

This preliminary purchase price allocation has been used to prepare Pro Forma adjustments for purposes of the Pro Forma Balance Sheet and Statement of Comprehensive Income. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation used in the Pro Forma adjustments. The final allocation may include changes in allocations to intangible assets such as developed technology and customer relationships as well as goodwill and other changes to assets and liabilities.

Note 3. Reclassification of Mid-States Aluminum Historical Financial Information

Certain classifications have been made to Mid-States Aluminum’s historical financial statements to conform with the Company’s financial presentation. Reclassifications reflected in the Unaudited Pro Forma Condensed Combine Balance Sheet and Unaudited Pro Forma Condensed Combined Statement of Comprehensive Income are presented in the following tables:


	As of June 30, 2023
	Mid-States				Mid-States
	Aluminum				Aluminum
	Before				After
	Reclassifications		Reclassifications		Reclassifications
Right-of-use assets - Finance	$	144	$	(144)	$	—
Property, plant and equipment, net		19,970		144		20,114
Prepaid expenses and other current assets		133		129		262
Notes payable - Bank and other		7,755		(7,755)		—
Current portion of long-term debt		—		697		697
Other long-term debt; less current maturities		—		7,187		7,187
Lease liabilities - Finance; current portion		36		(36)		—
Accounts payable		2,267		12		2,279
Customer deposits		204		(204)		—
Salaries, wages, and payroll taxes		—		1,441		1,441
Profit sharing and bonus		—		461		461
Other current liabilities		3,035		(1,674)		1,361
Lease liabilities - Finance; long-term portion		115		(115)		—
Other long-term liabilities		—		115		115


	Six Months Ended June 30, 2023
	Mid-States				Mid-States
	Aluminum				Aluminum
	Before				After
	Reclassifications		Reclassifications		Reclassifications
Net sales	$	32,989	$	(2,033)	$	30,956
Cost of sales		26,048		(2,112)		23,936
Profit sharing, bonuses and deferred compensation		—		235		235
Selling, general and administrative expenses		5,545		(139)		5,406
Interest income		59		(59)		—
Loss on disposal of property, plant and equipment		(106)		106		—
Rental income		30		(30)		—


	Twelve Months Ended December 31, 2022
	Mid-States				Mid-States
	Aluminum				Aluminum
	Before				After
	Reclassifications		Reclassifications		Reclassifications
Net sales	$	94,107	$	(8,504)	$	85,603
Cost of sales		73,629		(8,881)		64,748
Profit sharing, bonuses and deferred compensation		—		411		411
Selling, general and administrative expenses		7,930		(196)		7,734
Interest income		42		(42)		—
Gain on disposal of property, plant and equipment		16		(16)		—
Rental income		101		(101)		—
Other		3		(3)		—

Note 4. Pro forma adjustments

The Pro Forma adjustments included in the Unaudited Pro Forma Condensed Combined Financial Information are as follows:

Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2023:

(a)

Reflects the initial cash consideration of $90,002 paid to acquire Mid-States Aluminum.

(b)

Represents the estimated fair value adjustments to inventory, property, plant and equipment and intangible assets, plus the estimated goodwill recognized as part of purchase accounting.

(c)

Represents the payoff of Mid-State Aluminum’s small business loan of $5,009 as Mayville Engineering Company does not meet the necessary criteria to qualify for this type of loan.

(d)

Represents historical Mid-States Aluminum accounts eliminated upon the Acquisition.

Unaudited Pro Forma Condensed Combined Statement of Comprehensive Income for the Six Months Ended June 30, 2023:

(e)

Reflects estimated depreciation expense of $1,534 associated with the fair value of acquired property, plant and equipment less elimination of Mid-State Aluminum’s depreciation expense of $1,632.

(f)

Reflects the estimated amortization expense of $871 associated with the fair value of acquired intangible assets.

(g)

Reflects the additional estimated interest expense of $3,460 associated with the increased debt under the Company’s revolving credit note used to fund the Acquisition. This assumes an interest rate of 7.69%, the Company’s interest rate as of June 30, 2023. An increase in the interest rate on the Company’s revolving credit note of 0.125% would increase interest expense by $57 for the six-month period presented.

(h)

Reflects estimated income tax expense of $309 on MSA’s pretax income of $1,310 using an effective tax rate of 23.6%. Additionally, reflects estimated income tax benefit of $1,223 on the net impact of the pro form adjustments using a statutory rate of 28.9%.

Unaudited Pro Forma Condensed Combined Statement of Comprehensive Income for the Twelve Months Ended December 31, 2022:

(i)

Reflects estimated depreciation expense of $3,067 associated with the fair value of acquired property, plant and equipment less elimination of Mid-State Aluminum’s depreciation expense of $3,286.

(j)

Reflects the estimated amortization expense of $1,741 associated with the fair value of acquired intangible assets.

(k)

Reflects the additional estimated interest expense of $6,921 associated with the increased debt under the Company’s revolving credit note used to fund the Acquisition. This assumes an interest rate of 7.69%, the Company’s interest rate as of June 30, 2023. An increase in the interest rate on the Company’s revolving credit note of 0.125% would increase interest expense by $113 for the twelve-month period presented.

(l)

Reflects estimated income tax expense of $2,770 on MSA’s pretax income of $12,534 using an effective tax rate of 22.1%. Additionally, reflects estimated income tax benefit of $2,440 on the net impact of the pro forma adjustments using a statutory rate of 28.9%.

Non-Recurring Transactions:

No adjustments have been made to the Unaudited Pro Forma Condensed Combined Statements of Comprehensive Income for the following amounts as they are not expected to have a continuing impact on the Company’s financial statements subsequent to the Acquisition:

●

Expense related to estimated fair value adjustment of inventory recognized as part of purchase accounting of $891; and

●

Estimated transaction related expenses of $1,000, exclusive of the $899 included in the Company’s six-month period presented.

Document and Entity Information	Jul. 01, 2023
Document and Entity Information [Abstract]
Amendment Flag	false
Entity Central Index Key	0001766368
Document Type	8-K/A
Document Period End Date	Jul. 01, 2023
Entity Registrant Name	Mayville Engineering Company, Inc.
Entity Incorporation, State or Country Code	WI
Entity File Number	001-38894
Entity Tax Identification Number	39-0944729
Entity Address, Address Line One	715 South Street
Entity Address, City or Town	Mayville
Entity Address State Or Province	WI
Entity Address, Postal Zip Code	53050
City Area Code	920
Local Phone Number	387-4500
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	MEC
Security Exchange Name	NYSE
Entity Emerging Growth Company	true
Entity Ex Transition Period	false