We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Mayville (MEC) Set to Acquire Mid-States Aluminum for $96M
Read MoreHide Full Article
Mayville Engineering Company, Inc. (MEC - Free Report) is gearing up to acquire Mid-States Aluminum Corp. (“MSA”) for approximately $96 million. The acquisition is expected to be completed during the third quarter of 2023, subject to customary closing conditions. Post-acquisition, 250 employees will be joining Mayville’s workforce.
Buyout Synergies
Wisconsin-based MSA is a privately held, vertically integrated manufacturer of custom aluminum extrusions and fabrications. It offers various value-added services, including design, engineering, extrusions, fabrication and related services. Also, the company operates two state-of-the-art facilities in Fond du Lac, WI, with approximately 325,000 square feet of manufacturing space.
In 2022, MSA generated total revenues and adjusted EBITDA of approximately $86 million and $16 million, respectively. Adjusted EBITDA margin was more than 18%. MSA is expected to be immediately accretive to MEC’s earnings per share, adjusted EBITDA margin and free cash flow, excluding transaction costs.
Mayville expects the transaction to rapidly expand its capabilities into lightweight materials fabrication. Also, Mid-States’ futuristic design, engineering and manufacturing capabilities complement MEC’s existing operations, providing scope for higher-margin profitable growth within growing adjacent markets. For 2023, the buyout is projected to contribute $30-$35 million of net sales and $4-$6 million of adjusted EBITDA. In the next three years, MEC expects distinct synergies from this acquisition that completely aligns with its long-term focus on margin expansion and profitable growth.
Pro-forma ratio of net debt to adjusted EBITDA is likely to be approximately 2.5-2.8x. MEC intends to reduce its net leverage to 1.5-2.0x within the first 18 months after the closing of the transaction.
Image Source: Zacks Investment Research
Shares of MEC grew 7.8% during the trading session on Jun 20. The stock has surged 102% in the past year, outperforming the Zacks Engineering - R and D Services’ growth of 25.5%.
Mayville’s Value Creation Initiative
Mayville has been witnessing progress in its operational efficiency and top-line growth for a few quarters. In 2022, the company initiated its transformative MEC Business Excellence (MBX) program in pursuit of margin expansion and profitable growth. It first initiated this program in its Hazel Park and Michigan facilities, which are key milestones in the company’s long-term value creation framework.
The value creation framework of Mayville focuses on high-performance culture, operational excellence, commercial excellence, disciplined capital deployment and commercial expansion as well as human resource optimization. In first-quarter 2023, the company witnessed impressive results following the execution of the MBX initiative and is on track to meet its expected contribution for 2023.
In the first quarter of 2023, MEC’s net sales and adjusted EBITDA grew 4.7% and 6.3%, respectively, year over year. The result was backed by the impact from the Hazel Park facility ramp. For 2023, the company expects to deliver between 40 and 70 basis points of manufacturing margin benefit related MBX initiative.
Zacks Rank & Key Picks
Mayville currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks that investors may consider from the Construction sector are Martin Marietta Materials, Inc. (MLM - Free Report) , Vulcan Materials Company (VMC - Free Report) and Watsco, Inc. (WSO - Free Report) .
Martin Marietta currently sports a Zacks Rank #1 (Strong Buy). MLM delivered a trailing four-quarter earnings surprise of 31%, on average. Shares of the company have rallied 27.3% in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MLM’s 2023 sales and EPS indicates growth of 19% and 33.1%, respectively, from the previous year’s reported levels.
Vulcan Materials currently sports a Zacks Rank #1. VMC has a trailing four-quarter earnings surprise of 7.1%, on average. Shares of the company have risen 19.2% in the year-to-date period.
The Zacks Consensus Estimate for VMC’s 2023 sales and EPS indicates growth of 5.9% and 27.6%, respectively, from the previous year’s reported levels.
Watsco currently carries a Zacks Rank #2 (Buy). WSO delivered a trailing four-quarter earnings surprise of 5.3%, on average. Shares of the company have rallied 43.7% in the year-to-date period.
The Zacks Consensus Estimate for WSO’s 2023 sales and EPS indicates growth of 3.1% and 2.2%, respectively, from the previous year’s reported levels.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Mayville (MEC) Set to Acquire Mid-States Aluminum for $96M
Mayville Engineering Company, Inc. (MEC - Free Report) is gearing up to acquire Mid-States Aluminum Corp. (“MSA”) for approximately $96 million. The acquisition is expected to be completed during the third quarter of 2023, subject to customary closing conditions. Post-acquisition, 250 employees will be joining Mayville’s workforce.
Buyout Synergies
Wisconsin-based MSA is a privately held, vertically integrated manufacturer of custom aluminum extrusions and fabrications. It offers various value-added services, including design, engineering, extrusions, fabrication and related services. Also, the company operates two state-of-the-art facilities in Fond du Lac, WI, with approximately 325,000 square feet of manufacturing space.
In 2022, MSA generated total revenues and adjusted EBITDA of approximately $86 million and $16 million, respectively. Adjusted EBITDA margin was more than 18%. MSA is expected to be immediately accretive to MEC’s earnings per share, adjusted EBITDA margin and free cash flow, excluding transaction costs.
Mayville expects the transaction to rapidly expand its capabilities into lightweight materials fabrication. Also, Mid-States’ futuristic design, engineering and manufacturing capabilities complement MEC’s existing operations, providing scope for higher-margin profitable growth within growing adjacent markets. For 2023, the buyout is projected to contribute $30-$35 million of net sales and $4-$6 million of adjusted EBITDA. In the next three years, MEC expects distinct synergies from this acquisition that completely aligns with its long-term focus on margin expansion and profitable growth.
Pro-forma ratio of net debt to adjusted EBITDA is likely to be approximately 2.5-2.8x. MEC intends to reduce its net leverage to 1.5-2.0x within the first 18 months after the closing of the transaction.
Image Source: Zacks Investment Research
Shares of MEC grew 7.8% during the trading session on Jun 20. The stock has surged 102% in the past year, outperforming the Zacks Engineering - R and D Services’ growth of 25.5%.
Mayville’s Value Creation Initiative
Mayville has been witnessing progress in its operational efficiency and top-line growth for a few quarters. In 2022, the company initiated its transformative MEC Business Excellence (MBX) program in pursuit of margin expansion and profitable growth. It first initiated this program in its Hazel Park and Michigan facilities, which are key milestones in the company’s long-term value creation framework.
The value creation framework of Mayville focuses on high-performance culture, operational excellence, commercial excellence, disciplined capital deployment and commercial expansion as well as human resource optimization. In first-quarter 2023, the company witnessed impressive results following the execution of the MBX initiative and is on track to meet its expected contribution for 2023.
In the first quarter of 2023, MEC’s net sales and adjusted EBITDA grew 4.7% and 6.3%, respectively, year over year. The result was backed by the impact from the Hazel Park facility ramp. For 2023, the company expects to deliver between 40 and 70 basis points of manufacturing margin benefit related MBX initiative.
Zacks Rank & Key Picks
Mayville currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks that investors may consider from the Construction sector are Martin Marietta Materials, Inc. (MLM - Free Report) , Vulcan Materials Company (VMC - Free Report) and Watsco, Inc. (WSO - Free Report) .
Martin Marietta currently sports a Zacks Rank #1 (Strong Buy). MLM delivered a trailing four-quarter earnings surprise of 31%, on average. Shares of the company have rallied 27.3% in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MLM’s 2023 sales and EPS indicates growth of 19% and 33.1%, respectively, from the previous year’s reported levels.
Vulcan Materials currently sports a Zacks Rank #1. VMC has a trailing four-quarter earnings surprise of 7.1%, on average. Shares of the company have risen 19.2% in the year-to-date period.
The Zacks Consensus Estimate for VMC’s 2023 sales and EPS indicates growth of 5.9% and 27.6%, respectively, from the previous year’s reported levels.
Watsco currently carries a Zacks Rank #2 (Buy). WSO delivered a trailing four-quarter earnings surprise of 5.3%, on average. Shares of the company have rallied 43.7% in the year-to-date period.
The Zacks Consensus Estimate for WSO’s 2023 sales and EPS indicates growth of 3.1% and 2.2%, respectively, from the previous year’s reported levels.