Mayville Engineering Q2 2025 slides: Revenue declines amid destocking, Accu-Fab acquisition completed

Introduction & Market Context

Mayville Engineering Company (NYSE:MEC) released its second quarter 2025 results on August 6, showing continued pressure on revenue and profits amid customer destocking across multiple end markets. Despite the challenging environment, the company highlighted sequential margin improvement and the completion of its Accu-Fab acquisition, which closed on July 1, 2025.

The company’s stock has shown resilience in recent trading, closing at $16.72 on August 5, 2025, up 1.64% and well above its 52-week low of $11.72. This positions the stock in the middle of its 52-week range, with a high of $23.02.

Quarterly Performance Highlights

Mayville Engineering reported second quarter net sales of $132.3 million, a 19.1% decrease compared to $163.6 million in the same period last year. The decline was primarily attributed to customer channel inventory destocking across multiple segments.

Adjusted EBITDA for Q2 2025 came in at $13.7 million, down from $19.6 million in Q2 2024, while adjusted EBITDA margin was 10.3%, compared to 12.0% in the prior-year period. Despite the year-over-year decline, the company emphasized a 130 basis point sequential improvement in adjusted EBITDA margin from Q1 2025.

As shown in the following chart comparing key financial metrics between Q2 2024 and Q2 2025:

Adjusted diluted earnings per share fell to $0.10 in Q2 2025, down from $0.26 in Q2 2024. Free cash flow generation remained positive at $12.5 million, though lower than the $19.2 million generated in the prior-year period. The company maintained its focus on balance sheet strength, ending the quarter with a net leverage ratio of 1.4x and repurchasing $2.9 million of shares during the period.

Detailed Financial Analysis

The waterfall charts below provide insight into the drivers behind the year-over-year changes in net sales and adjusted EBITDA:

The net sales decline was most pronounced in the Commercial Vehicle segment (-$13.2 million), followed by Powersports (-$10.8 million), Construction & Access (-$7.1 million), and Agriculture (-$5.4 million). Only the Military segment showed positive contribution of $1.7 million.

On the adjusted EBITDA front, the volume/mix impact of -$7.8 million was partially offset by cost reductions ($2.5 million) and gain sharing ($2.3 million). Productivity challenges resulted in a $2.1 million negative impact.

The company’s non-GAAP reconciliation provides further detail on the components of adjusted EBITDA:

End Market Outlook

Mayville Engineering’s presentation highlighted challenging conditions across most of its end markets, with tariff and regulatory uncertainty weighing on near-term demand. The company provided the following outlook for its key markets:

The Commercial Vehicle market is projected to decline 9-14% in 2025, following an 11.9% decrease in 2024. Construction & Access equipment is expected to drop 8-13%, while Powersports faces a steeper 18-22% decline. The Agriculture segment continues to face significant headwinds with a projected 25-29% decrease.

Only the Military segment shows positive growth expectations of 3-9% for 2025, though this represents a significant slowdown from the 36.4% growth seen in 2024.

Strategic Initiatives

A key development highlighted in the presentation was the completion of the Accu-Fab acquisition, which closed on July 1, 2025. Management described the acquisition as "immediately accretive" and expects full integration by year-end 2025.

The company emphasized its position as a pure-play domestic metal fabricator with 100% domestic manufacturing across 22 facilities in seven states. This positioning, along with approximately 92% domestic material sourcing, largely insulates Mayville Engineering from tariff impacts.

Capital allocation priorities include debt paydown following the Accu-Fab acquisition, return-of-capital programs, bolt-on acquisitions in complementary vertical markets, and sustaining growth investments. The company maintains a disciplined approach to capital management with a flexible balance sheet and ample liquidity of $185 million as of Q2 2025.

Forward-Looking Statements

Mayville Engineering updated its 2025 financial guidance to reflect both the Accu-Fab acquisition and lower customer demand:

The updated guidance projects revenue of $528-$562 million, adjusted EBITDA of $49-$55 million, and free cash flow of $25-$31 million. This guidance incorporates both legacy MEC operations and the newly acquired Accu-Fab business.

The company’s business outlook assumes continued end market weakness through 2025, with channel inventory destocking expected to moderate in the second half of the year. Management anticipates that the Accu-Fab integration will be completed by year-end 2025, with synergies beginning to materialize in 2026.

These projections represent a shift from the company’s Q1 2025 position, when it maintained its full-year guidance despite an earnings miss. The updated outlook reflects the reality of persistent market challenges across most segments, balanced against the positive impact of the Accu-Fab acquisition and ongoing cost management initiatives.

Full presentation:

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