MapleTech Manufacturing Inc.1
You are a Junior Analyst on the Corporate Finance & Strategy team at MapleTech
Manufacturing Inc. (MTMI), a Canadian manufacturer of precision sub-assemblies used in
consumer electronics. It is late September 2025. MTMI sells to North American Original
Equipment Manufacturers (OEM) and contract manufacturers. The Company exports globally,
with most international sales to the United States (US) and Asia (Japan, South Korea, and
Vietnam).
The manufacturing industry, which has historically been stable and consistent, has seen
unprecedented uncertainty and change in the wake of Artificial Intelligence (AI) and an ongoing
global trade war.
Your boss Ajay Wint, the Chief Financial Officer (CFO), has been put in a very difficult position.
The Board of Directors has tasked Ajay to bring forward a plan that helps address ongoing
margin issues in the wake of consistently changing tariffs, evaluate an enterprise AI program
that the operations team has been suggesting, and balance the ongoing desire of the
Company’s shareholders for consistent and growing dividends. Your job, with a group of other
colleagues, is to perform the initial analysis and present a recommendation to Ajay and the rest
of senior management before they go forward to the Board. Ajay is also open to any other
recommendations you have concerning the business.
Company Background
MTMI was founded in 1999 in Kitchener-Waterloo, where it currently manufactures a single core
product:
•
FlexCon: flexible ribbon connectors and micro-soldered assemblies for wearables,
earbuds, and handhelds.
The production processes are highly automated with Surface Mount Technology (SMT) lines,
Computer Numerical Control (CNC) machining, and a final optical quality check. The Company
currently operates on a 24/6 schedule during its peak season.
The Company’s founder, Carmen Rider, is still the current Chief Executive Officer (CEO), with a
current ownership stake in the Company of 13%. There are 23 other shareholders, consisting of
a combination of financial institutions, private equity firms and individuals. Carmen has the
highest individual share of ownership.
MTMI’s revenue mix for 2024 by geographic location was 52% to the US, 25% to Asia (Japan,
Korea, Vietnam) and 23% to Canada.
This is a fictional company with case facts created for purposes of this case competition. No external
research is required for a team’s response. Clearly state any assumptions used beyond the case facts.
1
The company has an internal dividend policy payout ratio equal to 50% of EBITDA, which has
kept shareholders happy. MTMI has been consistent with this policy since Q1 2023. The
company pays dividends on a quarterly basis. Shareholders desire consistent dividends that
show slow, continued growth quarter-over-quarter.
With respect to the Company’s banking relationships, it currently has an open revolver loan with
CRB Bank up to $10,000,000 at a current interest rate of 8%. MTMI operates in Canadian
dollars.
The Operating Landscape
The ongoing tariffs and trade war has had significant impacts on MTMI’s business. Proposed
US import measures on FlexCon exports could increase from 2.0% to 7.5% starting in 2026.
Whereas, in Asia, trade remain open, but there are several large customers where they are
looking to renegotiate price decreases of 2 – 3%.
AI Transformation Proposal
The operations team of MTMI has proposed a two-year AI program that consists of the
following:
1. Vision AI for quality inspections to reduce the number of false rejects and escapes.
2. Predictive maintenance to reduce unplanned downtime and extending tool life.
3. Demand and production planning to better forecast accuracy, lower expedite fees and
Work-in-process (WIP).
A full financial model will be required for this proposal before bringing it forward to the Board.
The scope of the project is expected to take 2 years, with the project beginning in January 2026
and being fully operational by 2028.
The estimated costs of the AI project are:
• Capital expenditures of $3,500,000 (2026).
• Operating expenses of $900,000 annually.
• One-time change costs of $600,000 (2026).
The ongoing expected benefits of the project (fully realized in 2028):
• Scrap rate reduction of $1,100,000 annually.
• Labour productivity increase, reducing hours for savings of $800,000 annually.
Other factors the operations team are considering include the integration with existing systems,
cybersecurity concerns, vendor lock-in and change-management fatigue.
Selected Financial Information (CAD millions unless otherwise noted)
Income Statement (Fiscal year-end: December 31)
Revenue
84.0
FY2025
(First 6 months)
92.5
49.1
Cost of Goods Sold
(63.0)
(69.8)
(37.8)
Gross Profit
21.0
22.7
11.3
Operating Expenses
(8.6)
(9.1)
(4.7)
Research & Development
(2.1)
(2.3)
(1.2)
EBITDA
10.3
11.3
5.4
Depreciation
(3.4)
(3.6)
(1.9)
EBIT
6.9
7.7
3.5
Interest Expense
(0.8)
(0.9)
(0.5)
EBT
6.1
6.8
3.0
Income Tax (26%)
(1.6)
(1.8)
(0.8)
Net Income
4.5
5.0
2.2
Total Number of Shares
20.0
20.0
20.0
FY2023
FY2024
Balance Sheet (as at Dec 31)
FY2023
FY2024
Cash & Cash Equivalents
4.0
3.1
Accounts Receivable
10.8
11.5
Inventory
Property, Plant & Equipment
(net)
Total Assets
12.2
13.4
31.5
33.8
63.5
66.8
Accounts Payable
9.7
10.9
Long Term Debt
5.5
7.2
Excerpts from Management & Stakeholder Conversations
•
•
•
•
•
Chief Operating Officer (Operations): “We’re hitting practical limits with manual
inspection. Vision AI cuts both escapes and false rejects. The scrap curve pays for most
of this in three years.”
VP Sales (US): “Customers are open to shared-pain pricing if tariffs hit, think 50/50
split on increases, if we commit to on-time delivery and quality improvements.”
Union Rep (Night Shift): “No layoffs promised? Cross-training and premium pay for AIenabled lines would help adoption.”
Individual Shareholder: “If AI’s so great, prove it. Don’t cut my dividend to gamble.”
Institutional Investor (15-yr holder): “Focus on Return on Assets and Cash
Conversion. If pausing the dividend for 6 to 8 quarters funds a high-confidence
program, we’ll back you. Just show us thg guardrails and expected milestones.”
Additional Data Collected from Stakeholder Conversations
1. Tariff Pass-Through Assumptions:
• U.S. customers accept 50% of tariff increase as price adjustments after 1 quarter.
• Asia customers resist; assume only 25% of tariffs will pass-through (if any).
• Canada will remain unchanged.
2. AI Benefits Phase-in:
• FY2026: realize 25% of steady-state benefits.
• FY2027: 70%
• FY2028: 100%