Mayville Engineering (MEC) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Macroeconomic conditions could have a material adverse impact on our business, financial condition, cash flows and results of operations
2. 02We are affected by developments in the industries in which our customers operate
3. 03Most of our customers do not commit to long-term production schedules, which makes it difficult for us to schedule production accurately and achieve maximum efficiency of our manufacturing capacity
4. 04We may be unable to realize net sales represented by our awarded business, which could materially and adversely impact our business, financial condition, results of operations and cash flows
5. 05cannot assure you that we will realize any or all of the future net sales represented by our awarded business. Any failure to realize these net sales could have a material adverse effect on our business, financial condition, results of operations and cash flows
6. 06Failure to compete successfully in our markets could materially adversely affect our business, financial condition, results of operations or prospects
7. 07We may not be able to maintain our manufacturing, engineering and technological expertise
8. 08We are dependent on a limited number of large customers for current and future net sales. The loss of any of these customers or the loss of market share by these customers could materially adversely affect our business, financial condition, results of operations and cash flows
9. 09Entering new markets, either organically or via acquisition, poses new competitive threats and commercial risks
10. 10We depend on our key executive officers, managers, and trade-skilled personnel and may have difficulty retaining and recruiting qualified employees. Moreover, we operate in competitive labor markets, which may also impact our ability to hire and retain employees at our facilities
11. 11Availability of, and volatility in the prices of, raw materials and energy prices and our ability to pass along increased costs to our customers could adversely affect our results of operations
12. 12Our manufacturing operations are dependent upon third-party suppliers, making us vulnerable to supply shortages
13. 13Increases in the cost of employee benefits could impact our financial results and cash flows
14. 14Our growth strategy includes acquisitions, and we may not be able to identify attractive acquisition targets or successfully integrate acquired targets without impacting our business
15. 15If we fail to develop new and innovative processes or if customers in our market do not accept them, our results would be negatively affected
16. 16We are dependent on information technology and our systems and infrastructure face certain risks, including cybersecurity risks and data leakage risks
17. 17We may incur additional expenses and delays due to technical problems or other interruptions at our manufacturing facilities
18. 18Geopolitical and economic developments could adversely affect our business
19. 19The impact of foreign trade relations and associated tariffs, as well as our reliance on international suppliers for certain raw materials, could adversely impact our business
20. 20The risks associated with climate change, as well as climate change legislation and regulations, could adversely affect our operations and financial condition
21. 21Our manufacturing, painting and coating operations are subject to environmental, health and safety laws and regulations that could result in liabilities to us
22. 22If our manufacturing processes do not comply with applicable statutory and regulatory requirements, or if we manufacture components containing manufacturing defects, demand for our capabilities may decline and we may be subject to liability claims
23. 23Adverse judgments or settlements in legal disputes, including product liability, intellectual property infringement and other claims, could result in materially adverse monetary damages or injunctive relief and damage our business and/or our reputation
24. 24Any failure to protect our customers’ intellectual property that we use in the products we manufacture for them could harm our customer relationships and subject us to liability
25. 25Compliance or the failure to comply with regulations and governmental policies could cause us to incur significant expense
26. 26Because our industry is capital intensive and we have significant fixed and semi-fixed costs, our profitability is sensitive to changes in volume
27. 27Prior to our initial public offering, we were treated as an S Corporation, and claims of taxing authorities related to our prior status as an S Corporation could have an adverse effect on our business, financial condition and results of operations

Risks Related to Our Indebtedness

1. 28Our Amended and Restated Credit Agreement restricts our ability and the ability of our subsidiaries to engage in some business and financial transactions
2. 29We are able to incur additional debt, which could reduce our ability to satisfy our current obligations under our existing indebtedness

Risks Related to Ownership of Our Common Stock

1. 30Your ability to influence corporate matters may be limited because the ESOP and our 401(k) plan own a substantial amount of our stock and continue to have significant influence over us, which may limit your ability to influence the outcome of important transactions, including a change in control
2. 31The Trustees of the ESOP and the 401(k) Plan may have the power to vote a large block of shares on matters presented to shareholders for approval
3. 32The market price of our common stock may be volatile, and you could lose all or part of your investment
4. 33We do not expect to declare any dividends in the foreseeable future
5. 34Some provisions of Wisconsin law and our articles of incorporation and bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock