Mayville Engineering Company, Inc. (NYSE:MEC) Q1 2024 Earnings Call Transcript

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Jag A. Reddy: Thanks for the question, Tim. We continue to look for opportunities where we can do more complex fabrications for our customers. We continue to look for where we can do more, whether it is finishings, sub-assemblies, logistics, aftermarket. So, all of those activities is something that is at the forefront of our commercial processes and approaches. So I would say that every single opportunity that we look for, and more importantly, one in our prepared remarks where we talked about quite a number of wins in the quarter, I would say pretty much all of them have multiple offerings, not just metal fabrication, but also finishing and sub-assemblies, etcetera. So, every opportunity we look for will continue to have a lot of value addition, and that’s how we can show to our customers that we’re the preferred supplier to our end markets.

Timothy Moore: That’s helpful. Maybe just switching gear to Kaizens, which never stops — continuous improvement definition, but it seems like — have you uncovered a noticeable amount of extra capacity or maybe worker shift optimization in a major kind of tour to all the plants the past year, I’ve got to imagine some of those supervisors and managers we met a year ago were thinking they were at full capacity, but they weren’t, I’m just kind of wondering if you could talk about that for maybe incremental margins and unlocking capacity?

Jag A. Reddy: Yeah, as I just talked about, Defiance and Mayville as an example, we continue to find great opportunities to reduce our labor content, increase our capacity, and continue to grow in every single plant. So, a lot of that comes from our focused efforts in operations to standardize, to take cost out, and have really good discipline, whether it’s lean daily management, whether it is the supervisors and the ops managers and the plant managers running Kaizen. Me and my leadership team, we spent two weeks ago a full week on the plant floor. I was in jeans and steel toe shoes and safety glasses all week working on a plant Kaizen where we moved machines around, we relaid out the workflow, we did time studies. And in the end, each shift needed pre-Kaizen, each shift needed three operators post-Kaizen.

We were able to consolidate all the steps, and we were able to eliminate one operator and we can still run the cell more efficiently, more throughput than pre-Kaizen with only two operators. I mean, that is the focus that we have in every plant and every cell. So, we’re driving that level of discipline. So, we did 6 Kaizens during that week in Wisconsin. I won’t give you the numbers, but a significant amount of savings that we were able to unlock. But at the same time, the key is not what we did during that week, Tim, as you know. The key is to sustain those savings for the rest of the year and then beyond. So, we have also put in pretty disciplined processes where we’re able to monitor those savings on a monthly basis. And if they continue to remain strong, we’ll continue to monitor.

If they fall back, then we have countermeasures to get those savings back online. So, it’s a very focused effort across the company. And I’m really proud of our MBX team. I’m really proud of the entire MEC team who is energized by our MBX program, but more importantly, driving day-to-day, not just when me and the leadership team are on the plant floor, but day-to-day driving improvements, and that’s reading out in our results.

Timothy Moore: Great, Jag. That’s really helpful. I’m going to save my final three questions for offline when we talk in an hour, but thank you.

Jag A. Reddy: Thank you.

Operator: We have no further questions. I’d like to hand back to Jag Reddy for closing remarks.

Jag A. Reddy: Once again, thank you for joining our call. We appreciate your continued support of MEC, and we look forward to updating you on our progress next quarter. Should you have any questions, please contact Noel Ryan or Stefan Neely at Vallum, our Investor Relations Council. This concludes our call today. You may now disconnect.

Operator: This concludes today’s call. Thank you for joining. You may now disconnect your lines.

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