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'We have a little bit of a shareholder baby-boomer repurchase obligation': Mayville CEO on its IPO

Taylor Locke
Producer

Mayville Engineering Company (MEC), a U.S.-based manufacturer that provides a broad range of prototyping, production fabrication, coating, assembly, and aftermarket components, debuted its initial public offering on the New York Stock Exchange Thursday.

“Our company has grown significantly from roughly 14 years ago, we’re about 11-times the size that we were. However, because our shareholders are concentrated in Mayville, Wisconsin, we have a little bit of a shareholder baby-boomer repurchase obligation going on,” Robert D. Kamphuis, Mayville Engineering Company president and CEO, told Yahoo Finance On the Move.

Founded in 1945, Mayville, which has an ESOP (employee stock ownership plan) structure, has been employee-owned for about 35 years. Mayville priced its offering of 6.25 million shares of common stock at $17.00 per share on Thursday.

“We’ve grown a lot of shareholder value in the past, and intend to do so in the future, but in the future after doing an IPO we won’t have that repurchase obligation. We will simply give our retirees the shares and let them decide what they want to do,” he said, noting that now is the best time to go public. “That frees up cash flow, gives us a constant public marker of the value of our company, and gives our ESOP shareholders more flexibility.”

Mayville Engineering Chairman, President & CEO Robert Kamphuis, left, rings a ceremonial bell on the floor of the New York Stock Exchange, as his company's IPO begins trading, Thursday, May 9, 2019. (AP Photo/Richard Drew)

Kamphuis said the company’s ESOP shareholders will greatly benefit from the IPO. “They [ESOP shareholders] continue to have their stake in this, the only difference is, now there is a public marker versus an annual valuation process,” explained Kamphuis. “They’ll see how we compete at a new level in the capital markets, and I think we’re gonna do very well.”

No direct impact from U.S.-China trade dispute

As U.S.-China trade tensions continue to escalate, Kamphuis said he has not seen a significant impact on his business. In fact, the trade dispute and Mayville’s American base gives the company a competitive edge.

“Our supply base is all 100% North American, so we don’t have tariffs on the cost of our components. Directly we have no impact. Indirectly, our customers do,” Kamphuis said, “But we also know we have to come to the table and negotiate these things… sometimes there’s a little pain before the gain.”

Kamphuis said regionalization in the markets globally is taking place: “Companies are buying locally to support their markets and building their product locally for these markets. I think our company benefits from that and many of our customers do as well.”

Taylor Locke is a producer at Yahoo