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Financial Performance - Net sales for the three months ended September 30, 2025, were $144,310, an increase of $8,918 or 6.6% compared to $135,392 in the same period of 2024, driven by the acquisition of Accu-Fab[141] - EBITDA for the three months ended September 30, 2025, was $11,184, a decrease of $4,025 or 26.5% compared to $15,209 in 2024[141] - Adjusted EBITDA for the same period was $14,081, down $2,981 or 17.5% from $17,062 in 2024[141] - Net income (loss) for the three months ended September 30, 2025, was $(2,675), a decrease of $5,649 or 189.9% compared to $2,974 in 2024[141] - Net sales decreased by $48,081 or 10.4%, totaling $412,217 for the nine months ended September 30, 2025, compared to $460,298 in the prior year, driven by reduced customer demand and inventory destocking[151] - EBITDA decreased by $17,709 or 35.7%, amounting to $31,924 for the nine months ended September 30, 2025, compared to $49,633 in the previous year[151][160] Margins and Expenses - Manufacturing margins decreased to $15,939 for the three months ended September 30, 2025, down $1,156 or 6.8% from $17,095 in 2024, primarily due to restructuring costs and inventory step-up expenses[142] - Manufacturing margin percentage decreased to 11.0% for the three months ended September 30, 2025, down 160 basis points from 12.6% in 2024[143] - Manufacturing margins fell to $45,091, a decrease of $15,214 or 25.2%, with margin percentages dropping from 13.1% to 10.9% due to softening demand and restructuring costs[152][153] - Other selling, general and administrative expenses rose to $10,545 for the three months ended September 30, 2025, an increase of $2,986 or 39.5% compared to $7,559 in 2024[146] - Interest expense increased to $3,430 for the three months ended September 30, 2025, up $777 or 29.3% from $2,653 in 2024[147] - Amortization of intangible assets increased to $3,125 for the three months ended September 30, 2025, up $1,392 or 80.3% from $1,733 in 2024, due to the Accu-Fab acquisition[144] Cash Flow and Investments - Free cash flow for the nine months ended September 30, 2025, was $16,751, a decrease of $25,343 or 60.2% compared to $42,094 in 2024[139] - Cash provided by operating activities was $25,181, down $26,666 or 51.4% from $51,847 in the prior year, primarily due to lower net income and increased accounts receivable[161] - Cash used in investing activities surged to $148,470, an increase of $138,825 or 1,439.3%, largely due to the acquisition of Accu-Fab[162] - Cash provided by financing activities was $124,300, a significant increase of $166,996 compared to cash used of $42,696 in the prior year, driven by increased borrowings[163] Debt and Leverage - The company had a consolidated total leverage ratio of 3.47 to 1.00 as of September 30, 2025, below the maximum limit of 4.00 to 1.00[169] - The company has long-term debt principal payment obligations totaling $213.733 million due by 2028, with forecasted interest payments of $26.777 million[177] - As of September 30, 2025, the company has borrowed $211.858 million under its revolving credit facility at an interest rate of 5.39%[182] - Interest expense decreased by $2,582 or 28.8%, totaling $6,395 for the nine months ended September 30, 2025, due to lower interest rates[158] Market Risks and Obligations - The company is exposed to market risks from changes in customer forecasts, interest rates, and commodity prices, and employs financial instruments to mitigate these risks[179] - Commodity price fluctuations could negatively impact the company's results, but it aims to pass these costs onto customers to protect profit margins[184] - Total contractual obligations and commitments amount to $280.357 million, with significant payments due in 2026-2029[177] - The company has finance lease obligations of $2.612 million and operating lease obligations of $37.235 million[177] - The company does not currently utilize commodity hedging instruments to manage raw material price fluctuations[184] - The company’s cash flow could be negatively affected by rising interest rates, impacting its ability to finance operations and acquisitions[183] - The company’s operations may require additional capital for acquisitions, which may not be available on acceptable terms[176]

Financial Data and Key Metrics Changes - Total sales for Q3 2025 increased by 6.6% year over year to $144.3 million, while organic net sales excluding the AccuFab acquisition declined by 9.1% compared to the prior year period [15][19] - Manufacturing margin rate decreased to 11% from 12.6% in the prior year, primarily due to nonrecurring restructuring costs and lower customer demand in legacy markets [15][19] - Adjusted EBITDA margin fell to 9.8% from 12.6% year over year, attributed to lower legacy customer demand [18][19] - Free cash flow for Q3 was negative $1.1 million compared to positive $15.1 million in the prior year, impacted by $3.5 million in nonrecurring costs [18][19] Business Line Data and Key Metrics Changes - Net sales to the commercial vehicle market declined by 24% year over year, with a projected 28% decline in Class 8 production for 2025 [8][10] - Construction and access market revenues increased by 10.1% year over year, supported by the AccuFab acquisition and strong nonresidential activity [8][10] - Powersports market net sales grew by 6.4% year over year, driven by transient aluminum-related demand, while agriculture net sales declined by 21.8% due to elevated interest rates [9][10] Market Data and Key Metrics Changes - The data center and critical power market is expected to represent 20% to 25% of total revenues in the coming years, driven by significant capital investments and a growing opportunity pipeline [7][10] - Customer engagement remains strong, with $30 million in new project awards secured in the data center and critical power markets during Q3 [10][11] Company Strategy and Development Direction - The integration of the AccuFab acquisition is expected to yield revenue synergies of $20 million to $30 million in 2026, with gross margins projected to be approximately 10 percentage points above historical averages [6][7] - The company aims to diversify its revenue base and strengthen its long-term growth profile by focusing on faster-growing and higher-margin end markets [7][10] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed full-year 2025 financial guidance, expecting net sales between $528 million and $562 million, with continued softness in certain legacy markets [20][21] - The company anticipates a transitional period with margin pressure as it ramps up data center and critical power production while managing legacy market demand [21][22] Other Important Information - The company plans to use positive cash flow in Q4 to reduce debt, maintaining a focus on financial discipline and operational efficiency [20][21] - Net debt increased to $214.9 million, resulting in a net leverage ratio of 3.5 times as of September 30, 2025 [19][21] Q&A Session Summary Question: How is the rollout of productivity initiatives going? - Management reported that productivity initiatives have been implemented across all plants, positioning the company for significant margin expansion once volumes return [26][27] Question: What is the timeline for closing the decremental margin gap? - Management expects to see improvements by mid-2026, with a conservative approach to the commercial vehicle forecast [29][30] Question: What changes have occurred since the AccuFab acquisition? - The company has been actively engaging new customers and expanding its pipeline, with a qualified opportunity pipeline exceeding $100 million [38][39] Question: What are the key milestones for realizing AccuFab synergies? - Key milestones include ramping up production of battery backup cabinets and distribution units starting in Q4 and Q1, respectively [83] Question: How is production capacity being balanced between legacy markets and data center exposure? - The company is having discussions with legacy customers to secure additional volumes while reallocating capacity to data center customers [88][89]

Financial Data and Key Metrics Changes - Total sales for Q3 2025 increased by 6.6% year over year to $144.3 million, while organic net sales excluding the Accu-Fab acquisition declined by 9.1% compared to the prior year period [14][18] - Manufacturing margin rate was 11% for Q3 2025, down from 12.6% in the prior year, primarily due to non-recurring restructuring costs and lower customer demand [14][15] - Adjusted EBITDA margin decreased to 9.8% from 12.6% year over year, attributed to lower legacy customer demand [17] - Free cash flow for Q3 2025 was negative $1.1 million, compared to positive $15.1 million in the prior year, impacted by non-recurring costs [17][18] - Net debt increased to $214.9 million from $114.1 million at the end of Q3 2024, resulting in a net leverage ratio of 3.5 times [17][18] Business Line Data and Key Metrics Changes - Net sales to the commercial vehicle market declined by 24% year over year, with a projected 28% decline in Class 8 production for 2025 [8] - Construction and access market revenues increased by 10.1% year over year, supported by the Accu-Fab acquisition [8] - Power sports market net sales grew by 6.4% year over year, driven by transient aluminum-related demand [9] - Agriculture net sales declined by 21.8% due to elevated interest rates and lower farm income [9] Market Data and Key Metrics Changes - The company secured $30 million in new project awards within the data center and critical power markets during Q3 2025, contributing to a year-to-date total of $90 million in awards [10] - The emerging data center and critical power market is expected to represent 20-25% of total revenues in the coming years, with gross margins projected to be approximately 10 percentage points above historical averages [6][12] Company Strategy and Development Direction - The integration of the Accu-Fab acquisition is seen as a significant opportunity, with revenue synergy expectations now increased to between $20 million and $30 million in 2026 [5][6] - The company aims to diversify its revenue base and strengthen its long-term growth profile by focusing on faster-growing and higher-margin end markets [6][12] - The strategy includes repositioning capacity and resources to capitalize on the data center and critical power market, which is expected to yield incremental growth alongside legacy markets [7][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged persistent demand challenges in legacy markets but reaffirmed full-year 2025 financial guidance [4][18] - The company anticipates continued softness in certain legacy markets, particularly commercial vehicles, but expects to generate positive free cash flow in Q4 2025 [19] - Management expressed confidence in the company's ability to drive improved profitability and sustainable value creation for shareholders [12][20] Other Important Information - The company plans to use free cash flow to reduce debt, with a target to achieve a net leverage ratio of 3 times or lower by the end of 2026 [20] - Capital expenditures for 2026 are expected to be in the range of $15 million to $20 million, reflecting a slight increase from 2025 [84] Q&A Session Summary Question: How is the rollout of productivity initiatives going? - Management reported that the team has been actively driving MBX programs across the plant network, positioning the company for significant margin expansion once volumes return [24][25] Question: What is the timeline for closing the decremental margin gap? - Management indicated that by mid-2026, a decent readout from the actions taken should be expected [29] Question: Can you provide insights on the Accu-Fab acquisition's impact? - Management noted that the integration has exceeded expectations, with a robust pipeline of qualified opportunities and significant customer engagement [38][39] Question: What is the outlook for the commercial vehicle market in 2026? - Management took a conservative approach to the 2026 forecast, citing uncertainty in production rates and OEM comments [60][64] Question: What is the expected performance in the agriculture sector? - Management anticipates a low single-digit decline in agriculture for 2026, consistent with OEM feedback [70] Question: How is the company balancing production capacity between legacy markets and high-growth areas? - Management is engaging with legacy customers to secure additional volumes while reallocating capacity to data center customers [108]

Financial Performance - Net sales increased by 6.6% year-over-year, while organic net sales decreased by 9.1% to $123.1 million[6] - Adjusted EBITDA decreased year-over-year to $14.1 million, resulting in an adjusted EBITDA margin of 9.8%[6] - Free Cash Flow decreased year-over-year to ($1.1) million[6] - Adjusted Diluted EPS was $0.10[6] Strategic Initiatives and Outlook - The company maintained its 2025 financial guidance[8] - Accu-Fab integration is proceeding as planned, with expected completion by year-end 2025[8] - Increased 2026 Accu-Fab revenue synergies are projected to be $20 to $30 million, as the Data Center & Critical Power pipeline exceeds $100 million[8] End-Market Outlook - Commercial Vehicle market sales are expected to decline by 16%-26% in 2025[13] - Data Center & Critical Power is expected to grow by 12%-14% in 2025[18] - Accu-Fab acquisition is expected to add $32 - $36 million in net sales to the Data Center & Critical Power end market in 2H25[22] Capital Allocation - Net leverage ratio was 3.5x as of September 30, 2025, with a target of 3.0x or lower by the end of 2026[6, 32] - The company is prioritizing $7 – $10 million of investment in equipment and automation to meet high-growth Data Center & Critical Power demand over the next 18 months[28]

Core Insights - Mayville Engineering (MEC) reported quarterly earnings of $0.1 per share, exceeding the Zacks Consensus Estimate of $0.05 per share, but down from $0.14 per share a year ago, resulting in an earnings surprise of +100.00% [1] - The company achieved revenues of $144.31 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.65% and up from $135.39 million year-over-year [2] - The stock has increased approximately 12.3% since the beginning of the year, compared to a 16.5% gain for the S&P 500 [3] Earnings Outlook - The future performance of Mayville Engineering's stock will largely depend on management's commentary during the earnings call and the earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is -$0.04 on revenues of $130.87 million, while for the current fiscal year, it is $0.15 on revenues of $540.76 million [7] Industry Context - The Engineering - R and D Services industry, to which Mayville Engineering belongs, is currently ranked in the bottom 38% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which may impact investor sentiment [5]

Financial Performance - Net sales for Q3 2025 were $144.3 million, an increase of 6.6% year-over-year, primarily driven by the Accu-Fab acquisition, while organic net sales decreased by 9.1%[4] - GAAP net loss for Q3 2025 was $2.7 million, or ($0.13) per diluted share, compared to a net income of $3.0 million, or $0.14 per diluted share in the prior year[8] - Adjusted EBITDA for Q3 2025 was $14.1 million, representing an adjusted EBITDA margin of 9.8%, down from $17.1 million and 12.6% in the prior year[9] - Adjusted net income for Q3 2025 was $2.0 million, or $0.10 per diluted share, down from $5.8 million, or $0.27 per diluted share in the prior year[10] - Net loss for Q3 2025 was $2.68 million, compared to a net income of $2.97 million in Q3 2024, reflecting a significant decline in profitability[41] - The EBITDA margin for the three months ended September 30, 2025, was 7.7%, down from 11.2% in 2024, indicating a decline in profitability[44] - Adjusted EBITDA for the nine months ended September 30, 2025, was $40,747,000, down from $55,220,000 in 2024, reflecting a decrease of approximately 26.3%[44] - Free cash flow for Q3 2025 was ($1.1) million, a decrease from $15.1 million in the prior year, attributed to a $16.1 million decrease in net cash provided by operating activities[11] - Free cash flow for the nine months ended September 30, 2025, was $16,751,000, compared to $42,094,000 in 2024, representing a decrease of approximately 60.2%[47] Market Performance - The Data Center & Critical Power market saw net sales of $22.6 million, a significant increase from $4.7 million in the prior year, reflecting strong demand and contributions from the Accu-Fab acquisition[20] - Net sales to the Commercial Vehicle market decreased by 24.0% year-over-year to $39.2 million, primarily due to a 38.8% decline in North American Class 8 commercial vehicle production[14] - Net sales for Q3 2025 were $144.31 million, an increase of 6.7% from $135.39 million in Q3 2024[41] Financial Guidance and Expectations - The company maintained its full-year financial guidance for 2025, reflecting the impact of continued soft demand in legacy end markets[28] - The company expects revenue synergies from the Accu-Fab acquisition to range between $20 million and $30 million for 2026[2] Assets and Liabilities - Total assets increased to $585.58 million as of September 30, 2025, up from $445.57 million at the end of 2024, indicating strong growth in the company's asset base[39] - Total liabilities increased to $340.81 million as of September 30, 2025, compared to $193.82 million at the end of 2024, reflecting increased borrowing for operational and acquisition activities[39] - The company reported a significant increase in accounts payable, which rose to $53.07 million from $39.12 million, indicating higher operational activity or potential supply chain challenges[39] - The company’s retained earnings decreased to $56.33 million as of September 30, 2025, down from $60.09 million at the end of 2024, indicating challenges in maintaining profitability[39] Cash Flow and Expenditures - Free cash flow for the nine months ended September 30, 2025, was $25.18 million, down from $51.85 million in the same period of 2024, reflecting changes in operating cash flows[43] - The company incurred $140.06 million in cash outflows for acquisitions during the nine months ended September 30, 2025, indicating a strategic focus on growth through acquisitions[43] - Capital expenditures for the nine months ended September 30, 2025, totaled $8,430,000, down from $9,753,000 in 2024[47] Other Financial Metrics - The net leverage ratio as of September 30, 2025, was 3.5x, with net debt outstanding of $214.9 million[27] - The company reported interest expense of $3,430,000 for the three months ended September 30, 2025, compared to $2,653,000 in 2024, indicating an increase of approximately 29.2%[44] - The company recognized $591,000 in costs related to the step-up of Accu-Fab acquired inventory for the three months ended September 30, 2025[45] - The company incurred $3,125,000 in acquisition-related amortization of intangible assets for the three months ended September 30, 2025[45]

Core Viewpoint - Mayville Engineering Company, Inc. (MEC) is navigating financial challenges while pursuing strategic growth through acquisitions, with mixed analyst sentiments regarding its valuation and future performance [2][4][5]. Group 1: Company Overview - MEC is a contract manufacturer based in Mayville, Wisconsin, founded in 1945, serving industries such as commercial vehicles, construction, agriculture, and military [1]. - The company offers services including prototyping, tooling, production fabrication, coating, assembly, and aftermarket components [1]. Group 2: Financial Performance - The consensus price target for MEC has remained stable at $24, while Citigroup has set a lower target of $18, indicating differing analyst perspectives on the company's outlook [2][6]. - MEC's upcoming third-quarter 2025 earnings report is expected to show earnings of $0.05 per share and revenue of approximately $141 million, following a second-quarter report with an adjusted net income of $2.1 million and an adjusted diluted EPS of $0.10 [3][6]. - Despite these figures, the company reported a GAAP net loss of $1.1 million, reflecting ongoing financial pressures [3]. Group 3: Strategic Initiatives - The acquisition of Accu-Fab is a strategic move aimed at enhancing MEC's long-term growth prospects and is expected to contribute high-margin EBITDA to offset weaknesses in the legacy business [4]. - MEC faces short-term challenges, including soft demand in end markets, elevated interest rates, and geopolitical factors [4]. Group 4: Market Position and Analyst Sentiment - MEC is considered undervalued compared to its industry peers, supporting a "Strong Buy" rating from analysts [5]. - Analysts emphasize the importance of monitoring earnings estimates and revisions as the company navigates its current hurdles [5].

Core Viewpoint - Mayville Engineering Company (MEC) is set to release its third quarter 2025 financial results on November 4, 2025, after market close, followed by a conference call on November 5, 2025, at 10:00 a.m. ET to discuss the results and recent events [1]. Financial Results Announcement - The company will issue its third quarter 2025 results after the market closes on November 4, 2025 [1]. - A conference call is scheduled for November 5, 2025, at 10:00 a.m. ET to review the financial results and discuss recent events [1].