Mayville Engineering’s third quarter revealed a mixed picture, as the company outpaced Wall Street’s top-line expectations but faced clear operational headwinds. Management pointed to persistent demand challenges in legacy end markets, particularly commercial vehicles and agriculture, as a primary reason for margin compression. CEO Jagadeesh Reddy acknowledged, “Our third quarter results reflect the discipline and focus of our team as we navigated persistent demand challenges across our legacy end markets.” The integration of Accu-Fab drove new growth in higher-margin data center and critical power markets, but margin pressures and restructuring costs weighed on overall profitability.
Is now the time to buy MEC? Find out in our full research report (it’s free for active Edge members).
Mayville Engineering (MEC) Q3 CY2025 Highlights:
- Revenue: $144.3 million vs analyst estimates of $140.4 million (6.6% year-on-year growth, 2.8% beat)
- Adjusted EPS: $0.10 vs analyst estimates of $0.01 (significant beat)
- Adjusted EBITDA: $14.08 million vs analyst estimates of $13.62 million (9.8% margin, 3.4% beat)
- The company reconfirmed its revenue guidance for the full year of $545 million at the midpoint
- EBITDA guidance for the full year is $52 million at the midpoint, above analyst estimates of $50.98 million
- Operating Margin: 0%, down from 4.2% in the same quarter last year
- Market Capitalization: $342.6 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Mayville Engineering’s Q3 Earnings Call
- Ross Sparenblek (William Blair) asked about progress on productivity initiatives and readiness for a market rebound. CEO Jagadeesh Reddy responded that ongoing lean activities and plant reconfigurations should enable margin expansion when volumes return.
- Greg Palm (Craig-Hallum) pressed for details on Accu-Fab integration and the scale of new data center opportunities. Reddy explained that the pipeline exceeded initial expectations, with cross-selling synergies and access to larger programs now possible through combined resources.
- Michael Shlisky (D.A. Davidson) questioned the company’s conservative approach to commercial vehicle market forecasts. Reddy cited recent volatility and inconsistent OEM communications, emphasizing a preference for cautious planning, with upside potential if demand outperforms.
- Edward Jackson (Northland Securities) inquired about capital expenditure needs for supporting data center growth. Reddy indicated that existing assets cover most requirements, with only a modest increase in capital spending expected.
- Natalia Bak (Citi) asked about milestones for realizing Accu-Fab synergies and EBITDA margin in the new segment. Reddy detailed that major cross-selling wins would ramp in early 2026 and highlighted the higher margin profile of these programs.
Catalysts in Upcoming Quarters
In the upcoming quarters, the StockStory team will be monitoring (1) the pace at which data center and critical power projects move from pipeline to revenue, (2) whether margin pressures from underutilized legacy capacity abate as new business ramps, and (3) progress toward reducing net leverage as free cash flow improves. Execution on plant reconfigurations and successful customer diversification will also be important milestones for Mayville’s long-term strategy.
Mayville Engineering currently trades at $16.57, down from $18.04 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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