Group 1 - Mayville Engineering Company (NYSE: MEC) has recently fallen short of expectations, despite being reaffirmed as a "Strong Buy" candidate in March [1] - The investment rationale was based on cash flow generation and growth prospects within the oil and natural gas sector [1] Group 2 - Crude Value Insights provides an investing service focused on oil and natural gas, emphasizing cash flow and companies with real potential for value and growth [1] - Subscribers have access to a 50+ stock model account and in-depth cash flow analyses of exploration and production (E&P) firms [2]

[Cautionary Statement Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Important Factors Affecting Results](index=3&type=section&id=Important%20Factors%20Affecting%20Results) Outlines significant factors that could cause actual results to differ from forward-looking statements - **Macroeconomic conditions** (inflation, interest rates, labor availability, material cost pressures, inconsistent customer demand) have **negatively impacted** and may continue to impact the Company's business, financial condition, cash flows, and results of operations[9](index=9&type=chunk) - **Key risks** include developments in customer industries, production scheduling, competition, maintaining expertise, loss of large customers, volatility in raw material prices, geopolitical developments, and the ability to recruit and retain personnel[9](index=9&type=chunk) - **Additional risks** involve manufacturing issues, successful acquisition integration, developing new processes, information technology systems, legal disputes, capital-intensive industry, and the ability to remediate **material weakness** in internal control over financial reporting[9](index=9&type=chunk)[11](index=11&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited condensed consolidated financial statements, including balance sheets, income, cash flows, equity, and notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Summarizes the company's financial position, detailing assets, liabilities, and shareholders' equity at specific dates Condensed Consolidated Balance Sheet Summary (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total current assets | $113,728 | $112,944 | $784 | 0.7% | | Total assets | $433,745 | $445,570 | $(11,825) | -2.7% | | Total current liabilities | $69,596 | $64,592 | $5,004 | 7.7% | | Bank revolving credit notes | $69,280 | $79,725 | $(10,445) | -13.1% | | Total liabilities | $186,902 | $193,817 | $(6,915) | -3.6% | | Total shareholders' equity | $246,843 | $251,753 | $(4,910) | -2.0% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Presents the company's net sales, income from operations, and net income (loss) over specific periods Three Months Ended June 30, 2025 and 2024 (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :-------------------- | :------- | | Net sales | $132,328 | $163,636 | $(31,308) | -19.1% | | Income from operations| $76 | $8,150 | $(8,074) | -99.1% | | Net income (loss) | $(1,097) | $3,782 | $(4,879) | -129.0% | | Basic EPS | $(0.05) | $0.18 | $(0.23) | -127.8% | | Diluted EPS | $(0.05) | $0.18 | $(0.23) | -127.8% | Six Months Ended June 30, 2025 and 2024 (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Net sales | $267,907 | $324,905 | $(56,998) | -17.5% | | Income from operations| $1,654 | $15,780 | $(14,126) | -89.5% | | Net income (loss) | $(1,077) | $7,023 | $(8,100) | -115.3% | | Basic EPS | $(0.05) | $0.34 | $(0.39) | -114.7% | | Diluted EPS | $(0.05) | $0.34 | $(0.39) | -114.7% | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Details cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Cash Flow Summary (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Net cash provided by operating activities | $23,307 | $33,900 | $(10,593) | -31.2% | | Net cash used in investing activities | $(5,402) | $(6,767) | $1,365 | 20.2% | | Net cash used in financing activities | $(17,905) | $(27,491) | $9,586 | 34.9% | | Net increase (decrease) in cash and cash equivalents | $0 | $(358) | $358 | -100.0% | [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Outlines changes in shareholders' equity, including paid-in capital, treasury shares, and retained earnings Condensed Consolidated Shareholders' Equity Summary (in thousands) | Equity Component (in thousands) | Balance as of Dec 31, 2024 | Balance as of Jun 30, 2025 | Change (in thousands) | % Change | | :------------------------------ | :------------------------- | :------------------------- | :-------------------- | :------- | | Additional Paid-in-Capital | $207,076 | $207,850 | $774 | 0.4% | | Treasury Shares | $(15,409) | $(20,016) | $(4,607) | 29.9% | | Retained Earnings | $60,086 | $59,009 | $(1,077) | -1.8% | | Total Shareholders' Equity | $251,753 | $246,843 | $(4,910) | -2.0% | - Net loss of **$1,097 thousand** for the three months ended June 30, 2025, contributed to the decrease in retained earnings[21](index=21&type=chunk) - Treasury stock purchases amounted to **$2,860 thousand** for the three months ended June 30, 2025, increasing the negative balance[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Basis of presentation](index=9&type=section&id=Note%201.%20Basis%20of%20presentation) Describes the company's business, operations, accounting policies, and recent accounting pronouncements - **MEC** is a leading U.S.-based, vertically-integrated, value-added manufacturing partner providing solutions from concept to production, serving diverse end markets including commercial vehicles, construction, powersports, agriculture, and military[25](index=25&type=chunk) - The Company operates **27 facilities**, with **26 in operation**, across multiple states, and recently added **four facilities** in Illinois and North Carolina through the Accu-Fab acquisition[25](index=25&type=chunk) - **ASU 2024-03** (Expense Disaggregation Disclosures) is effective for fiscal years beginning after December 15, 2026, requiring disaggregation of certain expenses and disclosure of total selling expenses[27](index=27&type=chunk) - **ASU 2023-09** (Improvements to Income Tax Disclosures) is effective for fiscal years beginning after December 15, 2024, aiming to enhance transparency in income tax information, which the Company believes will expand disclosures but not materially impact financial statements[28](index=28&type=chunk)[29](index=29&type=chunk) [Note 2. Select balance sheet data](index=11&type=section&id=Note%202.%20Select%20balance%20sheet%20data) Provides detailed breakdowns of inventory, property, plant and equipment, goodwill, and intangible assets Inventory Components (in thousands) | Inventory Component (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Finished goods and purchased parts | $24,526 | $25,952 | | Raw materials | $19,595 | $19,386 | | Work-in-process | $9,826 | $9,418 | | Total Inventories, net | $53,947 | $54,756 | Property, Plant and Equipment, Net (in thousands) | Property, Plant and Equipment (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------- | :------------ | :---------------- | | Total property, plant and equipment, gross | $432,720 | $427,352 | | Less accumulated depreciation | $285,407 | $270,824 | | Total property, plant and equipment, net | $147,313 | $156,528 | - Depreciation expense for the six months ended June 30, 2025, was **$15,619 thousand**, up from **$15,179 thousand** in the prior year[32](index=32&type=chunk) - Goodwill balance remained unchanged at **$92,650 thousand** from December 31, 2024, to June 30, 2025[34](index=34&type=chunk) Intangible Assets, Net (in thousands) | Intangible Assets (in thousands) | June 30, 2025 Net | December 31, 2024 Net | | :------------------------------- | :---------------- | :-------------------- | | Customer relationships and contracts | $35,832 | $38,208 | | Trade name | $5,117 | $5,856 | | Developed technology | $3,500 | $3,850 | | Patents | $8 | $9 | | Total amortizable intangible assets, net | $44,457 | $47,923 | | Indefinite lived brand name asset | $3,811 | $3,811 | | Total intangible assets, net | $48,268 | $51,734 | - Amortization expense for intangible assets was **$3,466 thousand** for both the three and six months ended June 30, 2025 and 2024[36](index=36&type=chunk) [Note 3. Debt](index=12&type=section&id=Note%203.%20Debt) Details the company's credit agreement, revolving credit facility, financial covenants, and interest rates - The Company amended its credit agreement on June 26, 2025, increasing the revolving credit facility to **$350,000 thousand** from **$250,000 thousand** by exercising a **$100,000 thousand** accordion feature[38](index=38&type=chunk)[41](index=41&type=chunk) - As of June 30, 2025, the consolidated total leverage ratio was **1.36 to 1.00** (covenant maximum **3.50 to 1.00**) and the consolidated interest coverage ratio was **5.59 to 1.00** (covenant minimum **3.00 to 1.00**), indicating compliance with financial covenants[43](index=43&type=chunk)[45](index=45&type=chunk) - The interest rate on bank revolving credit notes decreased to **5.66%** at June 30, 2025, from **6.55%** at December 31, 2024[44](index=44&type=chunk) - Outstanding bank revolving credit notes decreased to **$69,280 thousand** at June 30, 2025, from **$79,725 thousand** at December 31, 2024[45](index=45&type=chunk) [Note 4. Leases](index=13&type=section&id=Note%204.%20Leases) Presents information on finance, operating, short-term, and variable lease expenses and related cash flows Lease Expense Details (in thousands) | Lease Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total finance lease expense | $199 | $131 | $341 | $243 | | Operating lease expense | $1,321 | $1,353 | $2,647 | $2,693 | | Short-term lease expense | $326 | $159 | $477 | $311 | | Variable lease expense | $49 | $60 | $164 | $112 | | Lease income | $(547) | $(537) | $(1,094) | $(1,069) | | Total lease expense | $1,348 | $1,166 | $2,535 | $2,290 | - Cash paid for operating lease liabilities for the six months ended June 30, 2025, was **$3,074 thousand**, up from **$2,980 thousand** in the prior year[52](index=52&type=chunk) - Right-of-use assets obtained for operating leases significantly increased to **$2,798 thousand** for the six months ended June 30, 2025, from **$337 thousand** in the prior year[52](index=52&type=chunk) [Note 5. Employee stock ownership plan](index=15&type=section&id=Note%205.%20Employee%20stock%20ownership%20plan) Details the ESOP plan, including expense recognition, plan amendments, and allocated shares - The Company recorded **no ESOP expense** for the three and six months ended June 30, 2025 and 2024[53](index=53&type=chunk) - As of January 1, 2025, the ESOP plan was amended to reduce the distribution period to **full distribution** on the annual distribution date of the year following separation[54](index=54&type=chunk) - Allocated ESOP shares decreased to **1,904,459** at June 30, 2025, from **3,474,467** at December 31, 2024[55](index=55&type=chunk) [Note 6. Retirement plans](index=16&type=section&id=Note%206.%20Retirement%20plans) Describes the company's 401(k) plan, including employer matching contributions and associated expenses - The Company provides a **50% match** for employee 401(k) contributions, up to **6%**[57](index=57&type=chunk) Employer 401(k) Match Expense (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Employer match expense| $801 | $922 | $1,747 | $1,976 | [Note 7. Income taxes](index=16&type=section&id=Note%207.%20Income%20taxes) Provides details on income tax expense/benefit, effective tax rates, and impacts of recent tax legislation Income Tax Expense and Effective Tax Rate | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax (benefit) expense | $(225) | $1,399 | $(234) | $2,433 | | Effective tax rate (ETR) | 17.02% | 27.00% | 17.85% | 25.73% | - The decrease in income tax expense/benefit is primarily due to a **pre-tax loss** in the current year period compared to pre-tax income in the prior year[125](index=125&type=chunk)[134](index=134&type=chunk) - The U.S. enacted **H.R. 1 (One Big Beautiful Bill Act)** on July 4, 2025, which is expected to impact deferred tax liability and income tax payable due to provisions for **100% bonus depreciation** and **full expensing of R&D expenditures**[61](index=61&type=chunk) - As of June 30, 2025, there is **one unrecognized tax benefit** requiring recognition, which would affect the Company's effective tax rate if recognized[62](index=62&type=chunk) [Note 8. Commitments and contingencies](index=17&type=section&id=Note%208.%20Commitments%20and%20contingencies) Addresses management's assessment of potential losses from litigation and claims - Management believes that the likelihood of loss from current litigation and claims is **remote**, or any reasonably possible loss is **not expected to have a material adverse impact** on the condensed consolidated financial statements[64](index=64&type=chunk) [Note 9. Deferred compensation](index=17&type=section&id=Note%209.%20Deferred%20compensation) Outlines the deferred compensation plan for eligible employees and related expenses and liabilities - Eligible employees can defer a portion of their compensation (up to **50% of base salary**, up to **100% of annual short-term cash incentive**) into a non-funded deferred compensation plan[65](index=65&type=chunk)[68](index=68&type=chunk) Deferred Compensation Expense (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Deferred compensation elected | $75 | $83 | $675 | $447 | | Total expense | $383 | $53 | $310 | $285 | - The short-term portion of accrued deferred compensation increased to **$1,382 thousand** at June 30, 2025, from **$251 thousand** at December 31, 2024[68](index=68&type=chunk) [Note 10. Self-Funded insurance](index=17&type=section&id=Note%2010.%20Self-Funded%20insurance) Describes the company's self-funded employee medical benefits and associated expenses and liabilities - The Company is self-funded for employee medical benefits and has an **aggregate stop loss limit** to mitigate risk[69](index=69&type=chunk) Self-Funded Insurance Expenses (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Expenses related to contract | $3,642 | $6,382 | $7,772 | $12,551 | - Estimated accrued liability for unpaid claims decreased to **$805 thousand** at June 30, 2025, from **$1,184 thousand** at December 31, 2024[69](index=69&type=chunk) [Note 11. Segments](index=19&type=section&id=Note%2011.%20Segments) Confirms the company operates as a single reporting unit and segment within the United States - The Company operates as a **single reporting unit and segment**, managed on a consolidated basis, providing value-added manufacturing solutions[70](index=70&type=chunk) - All sales are generated and assets are located **within the United States**[71](index=71&type=chunk) [Note 12. Fair value of financial instruments](index=19&type=section&id=Note%2012.%20Fair%20value%20of%20financial%20instruments) Discusses fair value measurements for financial instruments and impairment assessments for non-financial assets Fair Value Measurements of Financial Instruments (in thousands) | Financial Instrument | Balance at June 30, 2025 (in thousands) | Fair Value Measurements (Level 1) | | :------------------- | :-------------------------------------- | :-------------------------------- | | Deferred compensation liability | $5,701 | $5,701 | - Deferred compensation liabilities are recorded at amounts due to participants and are classified as **Level 1 or Level 2** in the fair value hierarchy, with the current balance entirely **Level 1**[77](index=77&type=chunk) - **No impairment** was recognized for non-financial assets (goodwill, intangible assets, PP&E) as of June 30, 2025[78](index=78&type=chunk) [Note 13. Earnings Per Share](index=20&type=section&id=Note%2013.%20Earnings%20Per%20Share) Presents basic and diluted earnings per share calculations and weighted average shares outstanding Earnings Per Share (EPS) | EPS Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $(0.05) | $0.18 | $(0.05) | $0.34 | | Diluted EPS| $(0.05) | $0.18 | $(0.05) | $0.34 | Weighted Average Shares Outstanding | Shares Outstanding | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic weighted average shares | 20,514,496 | 20,602,650 | 20,517,579 | 20,544,292 | | Diluted weighted average shares | 20,699,151 | 21,034,780 | 20,718,822 | 20,914,499 | [Note 14. Revenue Recognition](index=20&type=section&id=Note%2014.%20Revenue%20Recognition) Details contract balances, revenue recognition, and net sales by product category and end market Contract Balances (in thousands) | Contract Balances (in thousands) | As of December 31, 2024 | As of June 30, 2025 | | :------------------------------- | :---------------------- | :------------------ | | Contract Assets | $4,761 | $3,778 | | Contract Liabilities | $3,462 | $2,536 | - Revenue recognized from deferred revenue (contract liability) was **$2,514 thousand** for the six months ended June 30, 2025, compared to **$2,344 thousand** in the prior year[83](index=83&type=chunk) Net Sales by Product Category (in thousands) | Product Category (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Outdoor sports | $2,107 | $2,205 | $3,892 | $4,364 | | Fabrication | $63,956 | $87,201 | $131,814 | $178,115 | | Performance structures | $39,860 | $47,795 | $83,194 | $93,564 | | Tube | $20,560 | $19,846 | $37,070 | $38,921 | | Tank | $9,296 | $12,625 | $19,185 | $23,701 | | Total, net sales | $132,328 | $163,636 | $267,907 | $324,905 | Net Sales by End Market (in thousands) | End Market (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Commercial vehicle | $49,134 | $62,130 | $100,010 | $121,084 | | Construction & access | $20,173 | $27,230 | $39,698 | $55,676 | | Powersports | $19,625 | $30,306 | $41,875 | $60,597 | | Agriculture | $9,233 | $14,639 | $20,168 | $29,597 | | Military | $8,342 | $6,579 | $16,829 | $14,530 | | Other | $25,821 | $22,752 | $49,327 | $43,421 | | Total, net sales | $132,328 | $163,636 | $267,907 | $324,905 | [Note 15. Concentration of major customers](index=22&type=section&id=Note%2015.%20Concentration%20of%20major%20customers) Identifies major customers and their percentage contribution to net sales and accounts receivable Major Customer Concentration | Customer | Net Sales (3 Months Ended June 30, 2025) | Net Sales (3 Months Ended June 30, 2024) | Net Sales (6 Months Ended June 30, 2025) | Net Sales (6 Months Ended June 30, 2024) | Accounts Receivable (June 30, 2025) | Accounts Receivable (Dec 31, 2024) | | :------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :---------------------------------- | :--------------------------------- | | A | **15.5%** | 16.2 % | 16.1 % | 16.4 % | **10.7%** | 11.1 % | | B | 11.3 % | 13.0 % | 11.0 % | 13.5 % | 12.1 % | <10 % | | C | <10 % | 11.0 % | <10 % | 10.4 % | <10 % | <10 % | | D | <10 % | <10 % | <10 % | <10 % | 11.0 % | 15.2 % | [Note 16. Stock-based compensation](index=23&type=section&id=Note%2016.%20Stock-based%20compensation) Provides information on the incentive plan, stock-based compensation expense, and equity awards - The Company has **1,589,590 shares** available for issuance under the 2019 Omnibus Incentive Plan as of June 30, 2025[87](index=87&type=chunk) Stock-Based Compensation Expense (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Stock-based compensation expense | $1,007 | $1,338 | $2,108 | $2,495 | - **No stock options were granted** in the three or six months ended June 30, 2025 or 2024. **125,363 options were exercised** in the six months ended June 30, 2025, with a weighted average strike price of **$11.69**[90](index=90&type=chunk) - The Company granted **323,137 RSUs** (inclusive of director awards) and **169,062 PSUs** during the six months ended June 30, 2025[91](index=91&type=chunk)[92](index=92&type=chunk) - **PSUs** are earned based on a **3-year average Return on Invested Capital (ROIC)** and a **2027 adjusted EBITDA target** (for 2025 grants)[92](index=92&type=chunk) [Note 17. Common Equity](index=25&type=section&id=Note%2017.%20Common%20Equity) Details changes in common shares outstanding due to treasury stock purchases and stock-based compensation Common Shares Outstanding | Shares Outstanding | As of December 31, 2024 | As of June 30, 2025 | | :----------------- | :---------------------- | :------------------ | | Shares Outstanding | 20,416,908 | 20,299,977 | - Treasury stock purchases reduced outstanding shares by **304,136** during the six months ended June 30, 2025[94](index=94&type=chunk) - Common stock issued (including stock-based compensation impact) increased outstanding shares by **187,205** during the six months ended June 30, 2025[94](index=94&type=chunk) [Note 18. Subsequent Events](index=25&type=section&id=Note%2018.%20Subsequent%20Events) Discloses significant events occurring after the reporting period, including acquisitions and restructuring plans - On July 1, 2025, the Company acquired Accu-Fab for **$140,500 thousand**, subject to customary adjustments, financed by borrowing under its Credit Agreement[96](index=96&type=chunk) - Accu-Fab is a vertically integrated manufacturing partner serving critical power infrastructure, data center, and renewable energy end-markets[96](index=96&type=chunk) - The Company incurred **$2,378 thousand** in non-recurring transaction costs related to the Accu-Fab acquisition as of June 30, 2025[96](index=96&type=chunk) - On August 5, 2025, the Company initiated a restructuring plan to consolidate three warehouses and one manufacturing facility, expecting **$5,000-$7,000 thousand** in total restructuring costs[97](index=97&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on financial condition, operating results, liquidity, and macroeconomic impacts [Overview of Business and Macroeconomic Conditions](index=26&type=section&id=Overview%20of%20Business%20and%20Macroeconomic%20Conditions) Provides an overview of the company's business and the impact of current macroeconomic conditions - **MEC** is a leading U.S.-based, vertically-integrated manufacturing partner providing solutions from design to production for diverse end markets[100](index=100&type=chunk) - **Macroeconomic conditions**, including elevated interest rates, inconsistent customer demand, material cost inflation, and labor availability, have **negatively impacted** the Company and are expected to continue through 2025[102](index=102&type=chunk) [Assessment of Performance](index=26&type=section&id=Assessment%20of%20Performance) Evaluates key performance indicators, including non-GAAP measures like EBITDA and free cash flow - Net sales are affected by macroeconomic conditions, weather, acquisitions, and customer production schedules, recognized at shipment or delivery[103](index=103&type=chunk) - Manufacturing margins are net sales less cost of sales, with commodity price fluctuations largely mitigated by contractual pass-through agreements with customers[104](index=104&type=chunk) - Key non-GAAP performance indicators include **EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow**, used by management and investors to evaluate operating performance[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) EBITDA and Adjusted EBITDA Performance (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | EBITDA | $9,679 | $17,541 | $20,740 | $34,425 | | Adjusted EBITDA | $13,675 | $19,639 | $26,667 | $38,159 | | EBITDA Margin | 7.3% | 10.7% | 7.7% | 10.6% | | Adjusted EBITDA Margin| 10.3% | 12.0% | 10.0% | 11.7% | Free Cash Flow Analysis (in thousands) | Cash Flow Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $23,307 | $33,900 | | Capital expenditures | $5,408 | $6,874 | | Free cash flow | $17,899 | $27,026 | - **Free cash flow decreased by $9,127 thousand (33.8%)** for the six months ended June 30, 2025, due to lower cash from operating activities, partially offset by reduced capital expenditures[117](index=117&type=chunk) [Consolidated Results of Operations](index=31&type=section&id=Consolidated%20Results%20of%20Operations) Analyzes the company's net sales, manufacturing margins, income from operations, and net income (loss) Three Months Consolidated Results (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :-------------------- | :------- | | Net sales | $132,328 | $163,636 | $(31,308) | -19.1% | | Manufacturing margins | $13,624 | $22,277 | $(8,653) | -38.8% | | Income from operations| $76 | $8,150 | $(8,074) | -99.1% | | Net income (loss) | $(1,097) | $3,782 | $(4,879) | -129.0% | - **Net sales decreased by 19.1%** due to lower customer demand across most key end markets and customer de-stocking, partially offset by new projects in the 'Other' end market and increased military aftermarket demand[119](index=119&type=chunk) - Manufacturing margin percentage decreased by **330 basis points to 10.3%** due to reduced absorption of fixed costs from lower sales[121](index=121&type=chunk) Six Months Consolidated Results (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Net sales | $267,907 | $324,905 | $(56,998) | -17.5% | | Manufacturing margins | $29,152 | $43,209 | $(14,057) | -32.5% | | Income from operations| $1,654 | $15,780 | $(14,126) | -89.5% | | Net income (loss) | $(1,077) | $7,023 | $(8,100) | -115.3% | | Basic EPS | $(0.05) | $0.34 | $(0.39) | -114.7% | | Diluted EPS | $(0.05) | $0.34 | $(0.39) | -114.7% | - Six-month net sales decreased by **17.5%** due to reduced customer demand and de-stocking, partially offset by new initiatives in 'Other' and increased military aftermarket demand[128](index=128&type=chunk) - Six-month manufacturing margin percentage decreased by **240 basis points to 10.9%** due to reduced absorption of fixed costs from lower sales[130](index=130&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses cash flows from operating, investing, and financing activities, debt, and contractual obligations Cash Flow Activities (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Net cash provided by operating activities | $23,307 | $33,900 | $(10,593) | -31.2% | | Net cash used in investing activities | $(5,402) | $(6,767) | $1,365 | 20.2% | | Net cash used in financing activities | $(17,905) | $(27,491) | $9,586 | 34.9% | - Operating cash flow decreased due to **lower net income** and **higher cash use** from decreased accrued liabilities and less inventory decline, partially offset by reduced cash used for accounts receivable[136](index=136&type=chunk) - Investing cash flow decreased due to **lower capital expenditures**, reflecting a focus on leveraging recent investments and controlling spend[137](index=137&type=chunk) - Financing cash flow decreased due to **lower debt repayments** relative to borrowings and financing costs for the Credit Agreement amendment, partially offset by increased treasury stock purchases (**$4,607 thousand** vs. **$998 thousand**)[138](index=138&type=chunk) - The revolving credit facility was increased to **$350,000 thousand**, with **$115,923 thousand available** as of June 30, 2025 (prior to Accu-Fab acquisition), and the Company remains **compliant with debt covenants**[139](index=139&type=chunk)[141](index=141&type=chunk)[143](index=143&type=chunk) Contractual Obligations (in thousands) | Contractual Obligation (in thousands) | Total | 2025 (Remainder) | 2026 – 2027 | 2028 – 2029 | Thereafter | | :------------------------------------ | :------- | :--------------- | :---------- | :---------- | :--------- | | Long-term debt principal payment obligations | $71,155 | $500 | $1,000 | $69,655 | $0 | | Forecasted interest on debt payment obligations | $23,916 | $5,543 | $14,744 | $3,629 | $0 | | Finance lease obligations | $942 | $149 | $793 | $0 | $0 | | Operating lease obligations | $33,652 | $3,108 | $12,295 | $10,150 | $8,099 | | Total | $129,665 | $9,300 | $28,832 | $83,434 | $8,099 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses market risks from customer forecasts, interest rates, and commodity prices, and mitigation - Customer order forecasts can fluctuate dramatically, impacting the use and consumption of the Company's products[152](index=152&type=chunk) - The Company is exposed to interest rate risk on **SOFR-based floating rate borrowings**; a hypothetical **100-basis-point increase** would result in an additional **$0.4 million** in interest expense[153](index=153&type=chunk)[155](index=155&type=chunk) - Commodity raw material prices (steel, aluminum, copper, paint) are subject to fluctuations, but the Company mitigates this risk through **contractual pass-through agreements** with customers[156](index=156&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Evaluates disclosure controls, identifies a material weakness in internal control, and outlines remediation - Disclosure controls and procedures were deemed **not effective** as of June 30, 2025, due to a **material weakness** in internal control over financial reporting[158](index=158&type=chunk) - The **material weakness** relates to deficiencies in the design and operating effectiveness of internal control over financial reporting concerning the review and approval of journal entries[160](index=160&type=chunk) - Remediation efforts include **enhancing controls** over journal entry review/approval and providing **additional training** to personnel[161](index=161&type=chunk)[162](index=162&type=chunk) - Despite the **material weakness**, management believes the condensed consolidated financial statements **fairly present** the financial position, results of operations, and cash flows[158](index=158&type=chunk) [PART II. OTHER INFORMATION](index=43&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) Confirms the company is not currently involved in any material litigation proceedings - The Company is **not currently a party to any material litigation proceedings**[166](index=166&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to risk factors previously disclosed in the Annual Report on Form 10-K - **No material changes** to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[167](index=167&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the company's share repurchase activities under its approved program during the quarter Share Repurchase Activity | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--------- | :------------------------------- | :--------------------------- | | April 2025 | — | $— | | May 2025 | 58,473 | $16.00 | | June 2025 | 124,864 | $15.41 | | Total | 183,337 | | - The Board of Directors approved a new share repurchase program of up to **$25 million** through 2026 on October 26, 2023[168](index=168&type=chunk) - As of June 2025, **$14,497,519** remained available for repurchase under the program[168](index=168&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) Confirms no director or Section 16 officer adopted or terminated trading arrangements during the quarter - **No director or Section 16 officer** adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[169](index=169&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) Lists exhibits filed as part of this Quarterly Report, including acquisition agreements and certifications - Key exhibits include the **Purchase Agreement for Accu-Fab (Exhibit 2)** and the **First Amendment to the Amended and Restated Credit Agreement (Exhibit 10)**[171](index=171&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer (**Exhibits 31.1, 31.2, 32**) are also filed[171](index=171&type=chunk) [Signatures](index=45&type=section&id=Signatures) Contains official signatures of the company's President & CEO and CFO, certifying the report filing - The report is signed by **Jagadeesh A. Reddy**, President & Chief Executive Officer, and **Rachele M. Lehr**, Chief Financial Officer, on August 6, 2025[176](index=176&type=chunk)

Core Insights - The company is experiencing a significant decline in net sales, with a 19.1% year-over-year decrease to $132.3 million in fiscal Q2 2025, attributed to soft customer demand and inventory destocking [3][4][33] - Adjusted EBITDA fell to $13.7 million, down from $19.6 million in the prior year, with a margin decline of 170 basis points to 10.3% [5][35] - The company has withdrawn its 2026 financial targets due to macroeconomic uncertainty and reduced demand projections [3][13] Financial Performance - Net sales for fiscal Q2 2025 were $132.3 million, a 19.1% decrease year-over-year [4][33] - Adjusted EBITDA was $13.7 million, with a margin of 10.3%, down from 12% in the prior year [5][35] - Free cash flow was $12.5 million, reflecting a 92% conversion of adjusted EBITDA [5][27] Acquisition Impact - The acquisition of AccuFab, completed in July, expands the serviceable addressable market by approximately 60% to about $8 billion [7][20] - The company expects $28 million to $32 million in incremental revenue from AccuFab in fiscal 2025, with adjusted EBITDA contributions of $6 million to $8 million [8][38] - Pro forma net leverage increased to approximately 3.1 times post-acquisition, with a target to reduce it below 2 times by the end of 2026 [9][28] Market Outlook - Commercial vehicle production is projected to decline by 24% in 2025 compared to 2024, with no anticipated recovery in the second half of the year [2][23][16] - The company is tracking ahead of its goal of $100 million in new business awards for 2025, with significant wins in critical power and data center segments [10][25] - The company plans to report revenues from critical power and data center segments starting in Q3 2025, expected to comprise about 10% of trailing twelve-month revenue [8][39] Cost Management and Efficiency - The company is implementing fixed cost reduction initiatives, including consolidating three warehouses and one manufacturing facility, expected to yield annual savings of about $2 million [11][41] - Adjusted EBITDA guidance for 2025 includes a $1 million to $2 million benefit from cost improvements, net of inflationary pressures [39][40] - The company is focused on debt repayment using free cash flow, with a target to reduce net leverage below 2 times by 2026 [9][28]

Financial Data and Key Metrics Changes - Total sales for Q2 2025 decreased by 19.1% year-over-year to $132.3 million, primarily due to soft customer demand and channel inventory destocking [20] - Adjusted EBITDA for Q2 was $13.7 million, down from $19.6 million in the prior year, with an adjusted EBITDA margin of 10.3%, a decrease of 170 basis points [22] - Free cash flow during Q2 was $12.5 million, compared to $19.2 million in the prior year, reflecting less cash generated from operating activities [23] Business Line Data and Key Metrics Changes - Manufacturing margin decreased to $13.6 million in Q2 from $22.3 million in the same prior year period, with a manufacturing margin rate of 10.3% compared to 13.6% [20][21] - The company secured its first cross-selling win after the acquisition of AccuFab, which is expected to generate revenues in the third quarter [10] Market Data and Key Metrics Changes - The commercial vehicle market is projected to see a 24% decline in production in 2025, with an expected production of approximately 252,000 units [9] - Customer orders in key end markets have remained soft, particularly in commercial vehicles, power sports, and agriculture [7] Company Strategy and Development Direction - The company completed the acquisition of AccuFab, which is expected to increase its serviceable addressable market by approximately 60% to $8 billion [6] - The focus remains on increasing share of wallet with existing customers and expanding into high-growth adjacent markets [5] - The company aims to achieve a billion dollars in revenue and adjusted EBITDA margins exceeding 15% in the long term [15] Management's Comments on Operating Environment and Future Outlook - Management has withdrawn the 2026 financial targets due to the current macro environment but believes the financial profile implied by those targets is achievable once demand normalizes [15] - The company does not expect a recovery in market demand in the second half of 2025, particularly in the commercial vehicle market [9][72] Other Important Information - The company has initiated cost reduction initiatives and is consolidating facilities to optimize its manufacturing footprint [10][28] - The updated 2025 financial guidance reflects expected net sales between $528 million and $562 million, with adjusted EBITDA between $49 million and $55 million [24] Q&A Session Summary Question: Insights on AccuFab integration and synergies - Management expressed excitement about the integration of AccuFab and the potential for significant commercial synergies, projecting AccuFab revenues to reach approximately $100 million by 2028 [34] Question: Clarification on market outlook and customer feedback - Management noted that the primary change in outlook is in the commercial vehicle market, with significant reductions in production capacity observed among key customers [38][40] Question: Discussion on military and other segments - Management indicated that the military segment remains stable, with ongoing programs expected to progress due to global conflicts and restocking of US inventories [92] Question: Future contracts and reshoring opportunities - Management highlighted an increase in requests for quotations driven by tariffs, indicating a potential for reshoring aluminum fabrications to the US [84] Question: Sustainability of military backlog and revenue sources - Most military programs are recurring, with a small portion from aftermarket services, ensuring a stable revenue stream [90]

Financial Performance - Net sales decreased by 191% year-over-year in 2Q25, reaching $1323 million compared to $1636 million in 2Q24 [6, 10] - Adjusted EBITDA decreased year-over-year to $137 million in 2Q25, compared to $196 million in 2Q24 [6, 10] - Adjusted EBITDA margin improved sequentially to 103% in 2Q25, an increase of 130 bps [6] - Adjusted Diluted EPS was $010 in 2Q25 [6, 10] - Free Cash Flow was $125 million in 2Q25 [6, 10] Strategic Initiatives and Capital Allocation - The company repurchased $29 million of shares during the quarter [6] - Capital expenditures are prioritized with $7 to $10 million of investment in growth/automation advancements [27] - Net leverage was 14x as of June 30, 2025 [6, 30] Outlook - Revenue for 2025 is expected to be between $528 million and $562 million, a decrease of (9%) – (3%) year-over-year [35] - Adjusted EBITDA for 2025 is projected to be between $49 million and $55 million, a decrease of (24%) – (15%) year-over-year [35] - Free cash flow for 2025 is expected to be between $25 million and $31 million, a decrease of (68%) – (60%) year-over-year [35] End-Market Outlook - Commercial Vehicle end market is expected to decline by (9%) – (14%) in 2025 [13, 35] - Agriculture end market is projected to decline by (25%) – (29%) in 2025 [13, 35]

Financial Performance - Mayville Engineering reported quarterly earnings of $0.1 per share, matching the Zacks Consensus Estimate, but down from $0.18 per share a year ago [1] - The company posted revenues of $132.33 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 3.35%, compared to $163.64 million in the same quarter last year [2] - Over the last four quarters, Mayville Engineering has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2][1] Stock Performance and Outlook - Mayville Engineering shares have increased approximately 4.6% since the beginning of the year, while the S&P 500 has gained 7.6% [3] - The company's current consensus EPS estimate for the upcoming quarter is $0.28 on revenues of $154.76 million, and for the current fiscal year, it is $0.72 on revenues of $585.77 million [7] Industry Context - The Engineering - R and D Services industry, to which Mayville Engineering belongs, is currently ranked in the bottom 39% 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 Mayville Engineering's stock performance [5]

Executive Summary [Introduction & Q2 2025 Highlights](index=1&type=section&id=1.1%20Introduction%20%26%20Q2%202025%20Highlights) MEC reported Q2 2025 net sales of $132.3 million and a net loss of $1.1 million amid a challenging demand environment Second Quarter 2025 Key Financial Highlights | Metric | Value | | :--- | :--- | | Net sales | $132.3 million | | GAAP Net loss | $1.1 million | | GAAP Diluted EPS | ($0.05) | | Non-GAAP Adjusted Net Income | $2.1 million | | Adjusted Diluted EPS | $0.10 | | Adjusted EBITDA | $13.7 million | | Adjusted EBITDA margin | 10.3% | | Free Cash Flow | $12.5 million | | Ratio of net debt to trailing twelve-month Adjusted EBITDA (as of June 30, 2025) | 1.4x | [Management Outlook & Strategic Priorities](index=1&type=section&id=1.2%20Management%20Outlook%20%26%20Strategic%20Priorities) Management addresses soft demand, focuses on operational efficiency, and updates guidance following the Accu-Fab acquisition - Customer demand remained soft throughout Q2 2025 due to elevated uncertainty across most end markets, with limited visibility for the second half of the year, particularly in **Commercial Vehicle, Powersports, and Agriculture**[3](index=3&type=chunk) - Operational focus includes strategic pricing, new project wins (ahead of full-year target), and working capital efficiency, alongside initiatives to reduce fixed costs and rationalize asset capacity[3](index=3&type=chunk) - The acquisition of **Accu-Fab** was completed shortly after quarter-end, marking a key milestone in strategic diversification, with integration expected by year-end[3](index=3&type=chunk)[5](index=5&type=chunk) - MEC updated its **full-year 2025 guidance** to reflect the Accu-Fab acquisition and soft industry demand in legacy markets, while withdrawing 2026 financial targets due to the uncertain macroeconomic environment[5](index=5&type=chunk) - Long-term vision is to build MEC into a scaled, diversified domestic fabricator with **$1.0 billion in revenue**, supported by organic growth, disciplined M&A, and consistent operational execution[5](index=5&type=chunk) [About Mayville Engineering Company](index=5&type=section&id=1.3%20About%20Mayville%20Engineering%20Company) MEC is a leading U.S.-based manufacturing partner serving diverse end markets with extensive capabilities - MEC is a leading U.S.-based, vertically-integrated manufacturing partner providing design, prototyping, tooling, fabrication, aluminum extrusion, coating, assembly, and aftermarket components[33](index=33&type=chunk) - Customers operate in diverse end markets including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military, and other markets[33](index=33&type=chunk) - MEC maintains an extensive manufacturing infrastructure with **27 facilities** (26 in use) across nine states, offering a broad range of manufacturing processes and finishing capabilities[33](index=33&type=chunk)[34](index=34&type=chunk) Second Quarter 2025 Financial Performance [Consolidated Financial Results Overview](index=2&type=section&id=2.1%20Consolidated%20Financial%20Results%20Overview) Net sales and profitability declined year-over-year due to lower demand, though cost reductions provided a partial offset Q2 2025 vs. Q2 2024 Financial Performance | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net sales | $132.3M | $163.6M | -19.1% | | GAAP Net loss (income) | ($1.1M) | $3.8M | N/A | | GAAP Diluted EPS | ($0.05) | $0.18 | N/A | | Adjusted Net Income | $2.1M | $5.5M | -61.8% | | Adjusted Diluted EPS | $0.10 | $0.26 | -61.5% | | Adjusted EBITDA | $13.7M | $19.6M | -30.1% | | Adjusted EBITDA margin | 10.3% | 12.0% | -1.7 pp | | Free Cash Flow | $12.5M | $19.2M | -34.8% | - The decrease in net sales was primarily due to **lower customer demand** across most key end markets and customer channel inventory de-stocking, partially offset by new projects and increased after-market demand in Military[6](index=6&type=chunk) Detailed Performance Analysis [Manufacturing Margin](index=2&type=section&id=2.2.1%20Manufacturing%20Margin) Manufacturing margin decreased in Q2 2025 due to lower customer demand, partially offset by cost reduction efforts Manufacturing Margin Performance | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Manufacturing margin | $13.6 million | $22.3 million | | % of net sales | 10.3% | 13.6% | | YoY Decrease | $8.7 million | 3.3 pp | [Operating Expenses](index=2&type=section&id=2.2.2%20Operating%20Expenses) Operating expenses were impacted by lower bonus costs and higher non-recurring acquisition and transition expenses Operating Expenses (Q2 2025 vs. Q2 2024) | Expense Category | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Bonuses and deferred compensation | $1.5 million | $4.1 million | -63.4% | | Other selling, general and administrative expenses | $10.3 million | $8.3 million | +24.1% | - Increase in other SG&A expenses primarily reflects **non-recurring costs** related to the Accu-Fab acquisition and CFO transition[8](index=8&type=chunk) [Interest Expense](index=2&type=section&id=2.2.3%20Interest%20Expense) Interest expense decreased significantly year-over-year due to reduced borrowings and lower interest rates Interest Expense (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Interest expense | $1.4 million | $3.0 million | -53.3% | - The decrease in interest expense was due to a **decrease in borrowings** and lower interest rates relative to the prior year period[9](index=9&type=chunk) End Market Performance [Overall End Market Sales](index=3&type=section&id=3.1%20Overall%20End%20Market%20Sales) Most end markets saw sales declines due to reduced demand, with Military and Other markets showing positive growth Net Sales by End Market (Three Months Ended June 30, in thousands) | End Market | 2025 | 2024 | YoY Change ($) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | Commercial Vehicle | $49,134 | $62,130 | ($12,996) | -20.9% | | Construction & Access | $20,173 | $27,230 | ($7,057) | -25.9% | | Powersports | $19,625 | $30,306 | ($10,681) | -35.2% | | Agriculture | $9,233 | $14,639 | ($5,406) | -36.9% | | Military | $8,342 | $6,579 | $1,763 | +26.8% | | Other | $25,821 | $22,752 | $3,069 | +13.5% | | **Total Net Sales** | **$132,328** | **$163,636** | **($31,308)** | **-19.1%** | [Commercial Vehicle](index=3&type=section&id=3.2%20Commercial%20Vehicle) Commercial vehicle net sales declined 20.9% year-over-year due to reduced customer demand and regulatory uncertainty Commercial Vehicle Net Sales | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | $49.1 million | $62.1 million | -20.9% | - Decrease attributed to reduction in customer demand resulting from **regulatory uncertainty** and reduced order volumes[15](index=15&type=chunk) [Construction & Access](index=3&type=section&id=3.3%20Construction%20%26%20Access) Construction & access market sales fell 25.9% from the prior year, driven by lower demand and inventory de-stocking Construction & Access Net Sales | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | $20.2 million | $27.2 million | -25.9% | - Decrease primarily attributable to **lower customer demand** and channel inventory de-stocking[17](index=17&type=chunk) [Powersports](index=3&type=section&id=3.4%20Powersports) Powersports market sales decreased substantially by 35.2% due to reduced consumer demand and product rationalization Powersports Net Sales | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | $19.6 million | $30.3 million | -35.2% | - Decrease resulted from **reduced consumer demand**, customer product rationalization, and channel inventory de-stocking[19](index=19&type=chunk) [Agriculture](index=3&type=section&id=3.5%20Agriculture) Agriculture market net sales declined 36.9% year-over-year, reflecting lower demand and customer inventory de-stocking Agriculture Net Sales | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | $9.2 million | $14.6 million | -36.9% | - Decrease reflects lower customer demand across both large-ag and small-ag end markets as customers **de-stock their inventory**[21](index=21&type=chunk) [Military](index=4&type=section&id=3.6%20Military) The military market demonstrated growth with a 26.8% year-over-year increase in net sales from after-market demand Military Net Sales | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | $8.3 million | $6.6 million | +26.8% | - Increase primarily attributable to **higher service and after-market demand**[23](index=23&type=chunk) [Other End Markets](index=4&type=section&id=3.7%20Other%20End%20Markets) Other end markets grew 13.5% year-over-year, driven by new customer projects and increased automotive demand Other End Markets Net Sales | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | $25.8 million | $22.8 million | +13.5% | - Increase primarily attributable to **new customer projects** within industrial equipment & fixtures and power generation end markets, and higher demand for aluminum extrusions within the automotive end market[25](index=25&type=chunk) Financial Position & Guidance [Balance Sheet Update](index=4&type=section&id=4.1%20Balance%20Sheet%20Update) MEC maintained a healthy balance sheet with a net debt to Adjusted EBITDA ratio of 1.4x as of June 30, 2025 Balance Sheet Highlights (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Debt outstanding | $72.0 million | | Total cash and availability on senior secured revolving credit facility | $185.21 million | | Debt repaid during Q2 2025 | $8.7 million | | Shares repurchased during Q2 2025 | $2.9 million | | Ratio of net debt to trailing twelve-month Adjusted EBITDA | 1.4x | [Full-Year 2025 Financial Guidance](index=4&type=section&id=4.2%20Full-Year%202025%20Financial%20Guidance) Full-year 2025 guidance was revised to reflect the Accu-Fab acquisition and continued softness in legacy markets Full-Year 2025 Financial Guidance Update (in Millions) | Metric | FY 2024 Actual | FY 2025 Forecast (Low-Mid-High) | Prior FY 2025 Forecast (Low-Mid-High) | | :--- | :--- | :--- | :--- | | Net Sales | $581.6 | $528 - $545 - $562 | $560 - $575 - $590 | | Adjusted EBITDA | $64.4 | $49 - $52 - $55 | $60 - $63 - $66 | | Free Cash Flow | $77.7 | $25 - $28 - $31 | $43 - $47 - $50 | - The 2025 guidance reflects the acquisition of **Accu-Fab** (completed July 1, 2025) and the impact of continued soft end market demand in legacy markets[28](index=28&type=chunk) - Free Cash Flow guidance includes capital expenditures of **$13-$17 million** and non-recurring costs of **$5-$6 million** related to the CFO transition and Accu-Fab acquisition[29](index=29&type=chunk) Supplemental Information [Non-GAAP Financial Measures](index=6&type=section&id=5.1%20Non-GAAP%20Financial%20Measures) This section defines non-GAAP financial measures used by management as key performance indicators for investors - Non-GAAP measures used include EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow[35](index=35&type=chunk) - These measures are used by management as key performance indicators and are believed to be frequently used by securities analysts and investors to evaluate companies in the industry[36](index=36&type=chunk) - Non-GAAP measures are supplemental and should not be considered as alternatives to GAAP measures or as substitutes for analysis of GAAP results[36](index=36&type=chunk) Condensed Consolidated Financial Statements [Balance Sheets](index=7&type=section&id=5.2.1%20Balance%20Sheets) The balance sheet shows MEC's financial position as of June 30, 2025, compared to December 31, 2024 Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $113,728 | $112,944 | | Property, plant and equipment, net | $147,313 | $156,528 | | Goodwill | $92,650 | $92,650 | | Total assets | $433,745 | $445,570 | | Total current liabilities | $69,596 | $64,592 | | Bank revolving credit notes | $69,280 | $79,725 | | Total liabilities | $186,902 | $193,817 | | Total shareholders' equity | $246,843 | $251,753 | [Statements of Net Income (Loss)](index=8&type=section&id=5.2.2%20Statements%20of%20Net%20Income%20(Loss)) The income statement details financial performance for Q2 and H1 2025, showing a decline in net sales and net income Condensed Consolidated Statements of Net Income (Loss) (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $132,328 | $163,636 | $267,907 | $324,905 | | Income from operations | $76 | $8,150 | $1,654 | $15,780 | | Net income (loss) | ($1,097) | $3,782 | ($1,077) | $7,023 | | Diluted EPS | ($0.05) | $0.18 | ($0.05) | $0.34 | [Statements of Cash Flows](index=9&type=section&id=5.2.3%20Statements%20of%20Cash%20Flows) The cash flow statement illustrates sources and uses of cash, showing lower operating cash flow in H1 2025 Condensed Consolidated Statements of Cash Flows (in thousands, Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $23,307 | $33,900 | | Net cash used in investing activities | ($5,402) | ($6,767) | | Net cash used in financing activities | ($17,905) | ($27,491) | | Net increase (decrease) in cash and cash equivalents | $0 | ($358) | | Cash and cash equivalents at end of period | $206 | $314 | Reconciliation of Non-GAAP Measures [EBITDA and Adjusted EBITDA Reconciliation](index=10&type=section&id=5.3.1%20EBITDA%20and%20Adjusted%20EBITDA%20Reconciliation) This table reconciles GAAP net income (loss) to non-GAAP EBITDA and Adjusted EBITDA for Q2 and H1 2025 Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | ($1,097) | $3,782 | ($1,077) | $7,023 | | EBITDA | $9,679 | $17,541 | $20,740 | $34,425 | | Adjusted EBITDA | $13,675 | $19,639 | $26,667 | $38,159 | | Adjusted EBITDA Margin | 10.3% | 12.0% | 10.0% | 11.7% | [Adjusted Net Income and Diluted EPS Reconciliation](index=10&type=section&id=5.3.2%20Adjusted%20Net%20Income%20and%20Diluted%20EPS%20Reconciliation) This table reconciles GAAP net income (loss) and diluted EPS to their non-GAAP adjusted counterparts Reconciliation of Net Income (Loss) and Diluted EPS to Adjusted Net Income and Diluted EPS (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | ($1,097) | $3,782 | ($1,077) | $7,023 | | Diluted EPS | ($0.05) | $0.18 | ($0.05) | $0.34 | | Adjusted net income | $2,100 | $5,497 | $3,909 | $10,103 | | Adjusted Diluted EPS | $0.10 | $0.26 | $0.17 | $0.48 | [Free Cash Flow Reconciliation](index=10&type=section&id=5.3.3%20Free%20Cash%20Flow%20Reconciliation) This table reconciles net cash from operating activities to Free Cash Flow for Q2 and H1 2025 Reconciliation of Free Cash Flow (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $14,976 | $23,275 | $23,307 | $33,900 | | Less: Capital expenditures | $2,446 | $4,099 | $5,408 | $6,874 | | Free cash flow | $12,530 | $19,176 | $17,899 | $27,026 | [Conference Call Details](index=5&type=section&id=5.4%20Conference%20Call%20Details) Details are provided for the Q2 2025 results conference call scheduled for August 6, 2025 - Conference call scheduled for **Wednesday, August 6, 2025**, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time)[30](index=30&type=chunk) - Live webcast and investor presentation available on www.mecinc.com (Investors page)[30](index=30&type=chunk) - Telephone access: (833) 470-1428 (US) or (833) 950-0062 (Canada), Access Code: 584482[31](index=31&type=chunk) [Forward-Looking Statements](index=5&type=section&id=5.5%20Forward-Looking%20Statements) This section contains a standard disclaimer regarding forward-looking statements and associated risks - The press release includes forward-looking statements reflecting plans, estimates, and beliefs, which involve risks and uncertainties[32](index=32&type=chunk) - Actual results may differ materially from forward-looking statements due to various factors, including macroeconomic conditions, industry developments, competition, raw material volatility, and integration of acquisitions[32](index=32&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statements after the date made, except as required by federal securities laws[32](index=32&type=chunk)

Core Viewpoint - Mayville Engineering Company, Inc. (MEC) has announced a definitive agreement to acquire Accu-Fab, LLC for a total value of $140.5 million, expected to close in Q3 2025, which is anticipated to enhance MEC's business growth and operational efficiency [1][3][4]. Company Overview - Accu-Fab is a vertically integrated contract manufacturer providing design, engineering, sheet metal fabrication, and specialized finishing services to large OEMs, operating in approximately 200,000 square feet of manufacturing space across Raleigh, NC, and Wheeling, IL [2]. Financial Impact - Accu-Fab reported total net sales of approximately $61 million and adjusted EBITDA of about $14 million for 2024, with an adjusted EBITDA margin exceeding 23%, indicating a positive contribution to MEC's financials post-acquisition [3]. - MEC expects the acquisition to contribute $28-$32 million to net sales and $6-$8 million to adjusted EBITDA in 2025, along with an anticipated $1 million in annual cost synergies by 2026 through the implementation of its MBX framework [4]. Strategic Benefits - The acquisition is expected to strengthen MEC's market presence and accelerate entry into new markets, leveraging Accu-Fab's customer relationships and value-added services to drive revenue and cost synergies [5]. - MEC's focus on operational improvements and cost discipline, alongside strategic pricing and capital efficiency initiatives, positions the company well amid macroeconomic uncertainties [7]. Stock Performance - Following the acquisition announcement, MEC's stock rose by 5.2% in a single trading day, and the stock has increased by 26.7% over the past month, outperforming the Zacks Engineering - R and D Services industry's growth of 13.3% [1][5].

Summary of Mayville Engineering Company (MEC) Acquisition Call Company and Industry - **Company**: Mayville Engineering Company (MEC) - **Acquired Company**: AccuFab LLC - **Industry**: Metal fabrication solutions, focusing on high growth end markets such as critical power infrastructure, data centers, and renewable energy Key Points and Arguments 1. **Acquisition Details**: MEC announced the acquisition of AccuFab for a total cash consideration of $140.5 million, with customary adjustments expected to close in Q3 2025 [4][5][13] 2. **Strategic Fit**: AccuFab is a vertically integrated provider, enhancing MEC's geographic footprint and allowing for better service to customers in high growth markets [4][5] 3. **Cultural Alignment**: AccuFab's technology-forward approach and strong innovation track record complement MEC's operations [5] 4. **Financial Impact**: The acquisition is expected to be immediately accretive to adjusted EBITDA, margin, and earnings per share, with projected revenues of $28 million to $32 million and adjusted EBITDA of $6 million to $8 million in the second half of 2025 [14][15] 5. **Operational Synergies**: MEC anticipates generating approximately $1 million in annual cost synergies by 2026 through the implementation of its MBX Lean manufacturing framework [10][11] 6. **Market Diversification**: The acquisition allows MEC to diversify into less cyclical, high-growth markets, moving away from its legacy focus on wheeled mobility platforms [8][9] 7. **Revenue Synergies**: MEC estimates potential revenue synergies of $3 million to $5 million over the next 24 months, with further upside as customer relationships deepen [10] 8. **Capacity Utilization**: AccuFab is currently operating at 50-60% capacity, providing an opportunity for MEC to drive incremental volume and growth [11][61] 9. **Customer Base**: AccuFab's top 10 customers account for approximately 75% of its revenue, with limited overlap with MEC's existing customer base [33] 10. **Debt Management**: MEC plans to prioritize free cash flow generation to reduce net leverage from approximately three times to 1.5-2 times within 18 months post-acquisition [15][39] Additional Important Information - **Integration Timeline**: The initial integration process is expected to take about six months [6] - **Management Retention**: The current management team at AccuFab will remain post-acquisition, facilitating a smoother integration process [50] - **CapEx Requirements**: Expected annual capital investment for AccuFab is projected to be between $2 million and $3 million, aligning with MEC's previous guidance [39] - **Market Growth**: The data center and critical power markets are projected to grow by 20% from 2023 to 2024, making them attractive for MEC's expansion [25] - **Competitive Landscape**: AccuFab operates in a competitive environment with significant players, but its 95% sole-source revenue indicates strong customer reliance [71] This summary encapsulates the key aspects of the acquisition call, highlighting the strategic rationale, financial implications, and operational plans associated with the acquisition of AccuFab by Mayville Engineering Company.

Acquisition Overview - MEC will acquire Accu-Fab for $140.5 million, plus customary adjustments, funded through MEC's existing $250 million Credit Facility[8] - The transaction is expected to close in 3Q25, subject to customary closing conditions[8] - Accu-Fab's 2024 Adjusted EBITDA margin was approximately 23%, with net sales growth exceeding 20%[9] - MEC plans to retain all approximately 250 Accu-Fab employees[9,14] Strategic Rationale - Accu-Fab diversifies MEC's revenue into higher-value, emerging end-markets like critical power infrastructure, data centers, and renewable energy[6,8] - Accu-Fab's premium markets drive increased margins and over 50% FCF conversion[11] - Identified $4-$6 million in potential annual revenue and cost synergies over the next 24 months[9] - Accretive profitability, synergies, and growth trajectory support an IRR of approximately 15%[11] Financial Impact - Accu-Fab's revenue was approximately $61 million in FY2024 with Adjusted EBITDA of approximately $14 million[14] - Pro-forma combined annual sales are approximately $643 million with Adjusted EBITDA of approximately $78 million[25] - Expects pro-forma, TTM net leverage of approximately 3.0x at closing[9]