Mayville Engineering Company to Receive $25.5 Million in Settlement Agreement

Rhea-AI Summary

Mayville Engineering Company (NYSE: MEC) has announced a formal Settlement Agreement with Peloton Interactive to resolve a previously-disclosed lawsuit. Under the agreement terms, MEC will receive a $25.5 million gross payment from Peloton, and both parties will dismiss the lawsuit and exchange mutual releases. The agreement was executed on October 28, 2024, with no admission of liability by either party.

Positive

• Settlement agreement secures $25.5 million gross payment for MEC
• Resolution of legal dispute eliminates ongoing litigation costs and uncertainty

Negative

• None.

Insights

Financial Analyst

The $25.5 million settlement represents a significant financial windfall for MEC, equating to approximately 5.9% of their market capitalization. This one-time payment will substantially boost their cash position and could be strategically deployed for debt reduction, capital investments, or shareholder returns. The resolution eliminates legal uncertainty and associated costs, while the mutual release clause prevents future litigation on this matter. Given MEC's diverse manufacturing portfolio, this settlement helps clean up their balance sheet without disrupting ongoing operations. The timing is particularly favorable as it provides additional financial flexibility in the current high-interest-rate environment. The absence of liability admission maintains MEC's market reputation while securing meaningful compensation.

Legal Expert

The settlement structure demonstrates sophisticated legal strategy, with both parties opting for a clean break through mutual releases. This approach effectively caps any future liability while avoiding protracted litigation costs. The $25.5 million settlement without admission of liability is particularly noteworthy, as it allows MEC to maintain its legal position while securing substantial compensation. The formal agreement's timing and structure suggest careful negotiation to maximize value while minimizing reputational impact. This resolution provides clarity for stakeholders and removes a significant contingent liability from MEC's risk profile.

MILWAUKEE--(BUSINESS WIRE)-- Mayville Engineering Company (NYSE: MEC) (the “Company” or “MEC”), a leading value-added provider of design, prototyping and manufacturing solutions serving diverse end-markets, today announced that it has entered into a formal Settlement Agreement (the “Agreement”) that will resolve a previously-disclosed lawsuit with Peloton Interactive, Inc. (“Peloton”). Under the terms of the Agreement, MEC and Peloton have agreed to dismiss the lawsuit and exchange mutual releases, and MEC will receive a gross payment of $25.5 million from Peloton, with no admission of liability by either party. The Agreement was executed as of October 28, 2024.

ABOUT MAYVILLE ENGINEERING COMPANY

Founded in 1945, MEC is a leading U.S. based, vertically integrated, value-added manufacturing partner providing a full suite of manufacturing solutions from concept to production, including design, prototyping and tooling, fabrication, aluminum extrusion, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military, and other end markets. Along with process engineering and development services, MEC maintains an extensive manufacturing infrastructure with 23 facilities across seven states. These facilities make it possible to offer conventional and CNC (computer numerical control) stamping, shearing, fiber laser cutting, forming, drilling, tapping, grinding, tube bending, machining, welding, assembly, and logistic services. MEC also possesses a broad range of finishing capabilities including shot blasting, e-coating, powder coating, wet spray and military grade chemical agent resistant coating (CARC) painting. For more information, please visit www.mecinc.com.

FORWARD-LOOKING STATEMENTS

This press-release includes forward-looking statements that reflect plans, estimates and beliefs. Such statements involve risk and uncertainties. Actual results may differ materially from those contemplated by these forward-looking statements as a result of various factors. Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements include, but are not limited to: macroeconomic conditions, including inflation, elevated interest rates and recessionary concerns, as well as labor availability and material cost pressures, have had, and may continue to have, a negative impact on our business, financial condition, cash flows and results of operations (including future uncertain impacts); risks relating to developments in the industries in which our customers operate; risks related to scheduling production accurately and maximizing efficiency; our ability to realize net sales represented by our awarded business; failure to compete successfully in our markets; our ability to maintain our manufacturing, engineering and technological expertise; the loss of any of our large customers or the loss of their respective market shares; risks related to entering new markets; our ability to recruit and retain our key executive officers, managers and trade-skilled personnel; volatility in the prices or availability of raw materials critical to our business; manufacturing risks, including delays and technical problems, issues with third-party suppliers, environmental risks and applicable statutory and regulatory requirements; our ability to successfully identify or integrate acquisitions; our ability to develop new and innovative processes and gain customer acceptance of such processes; risks related to our information technology systems and infrastructure, including cybersecurity risks and data leakage risks; geopolitical and economic developments, including foreign trade relations and associated tariffs; results of legal disputes, including product liability, intellectual property infringement and other claims; risks associated with our capital-intensive industry; risks related to our treatment as an S Corporation prior to the consummation of our initial public offering; risks related to our employee stock ownership plan’s treatment as a tax-qualified retirement plan; and other factors described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, as such may be amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q. This discussion should be read in conjunction with our audited consolidated financial statements included in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2023. We undertake no obligation to update or revise any forward-looking statements after the date on which any such statement is made, whether as a result of new information, future events or otherwise, except as required by federal securities laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241031112559/en/

INVESTOR CONTACT

Stefan Neely or Noel Ryan

(615) 844-6248

MEC@val-adv.com

Source: Mayville Engineering Company

FAQ

How much will MEC receive in the Peloton settlement agreement?

Mayville Engineering Company (MEC) will receive a gross payment of $25.5 million from Peloton as part of the settlement agreement executed on October 28, 2024.

When was the settlement agreement between MEC and Peloton executed?

The settlement agreement between Mayville Engineering Company (MEC) and Peloton was executed on October 28, 2024.

Did either MEC or Peloton admit liability in the settlement?

No, the settlement agreement specified that there was no admission of liability by either Mayville Engineering Company (MEC) or Peloton.