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1. Company Snapshot

1.a. Company Description

Mayville Engineering Company, Inc., together with its subsidiaries, operates as a contract manufacturer that serves the heavy and medium duty commercial vehicle, construction and access equipment, powersports, agriculture, military, and other end markets in the United States.The company provides a range of prototyping and tooling, production fabrication, coating, assembly, and aftermarket components.It also supplies engineered components to original equipment manufacturers.


The company was founded in 1945 and is headquartered in Mayville, Wisconsin.

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1.b. Last Insights on MEC

Mayville Engineering's recent performance was driven by strategic growth initiatives, including a major acquisition of Accu-Fab, which brings high-margin EBITDA and offsets weakness in its legacy business. Despite short-term headwinds from soft end-market demand and high interest rates, management's efforts to boost long-term prospects remain intact. The company's Q2 earnings met estimates, with quarterly earnings of $0.1 per share. A "Strong Buy" rating from a recent analysis suggests confidence in the company's undervalued position compared to peers.

1.c. Company Highlights

2. Mayville Engineering's Q4 Results: Navigating Transition

Mayville Engineering Company, Inc.'s fourth-quarter total sales reached $134.3 million, representing a 10.7% increase year over year. Excluding the AccuFab acquisition's impact, organic net sales declined by 5.3%. The manufacturing segment faced challenges, with a margin rate of 6.6%. The company's EPS loss was narrower than expected, with a loss of $0.08 per share compared to the estimated loss of $0.16 per share. The company's actual EPS was -$0.08 vs -$0.16 expected.

Publication Date: Mar -09

📋 Highlights
  • Data Center Momentum:: 13% YoY growth in data center/critical power market, with $125M qualified pipeline and $40-50M 2026 projects.
  • Margin Pressures:: 6.6% manufacturing margin decline due to $1-1.5M Q1 2026 project launch costs, tapering through 2026.
  • Market Expansion:: $3.2B total addressable market for data centers, growing at 16% CAGR (2026-2030), with $115-185M opportunity per gigawatt.
  • Segment Diversification:: 20%+ revenue contribution from data centers by 2026, targeting 20-22% adjusted EBITDA margins for the segment.

Revenue Growth and Segment Performance

The company's data center and critical power segment is a significant growth driver, with a 13% year-over-year increase. The construction segment also saw a rise, driven by new business wins. Mayville Engineering expects this momentum to continue, with plans to expand capacity to meet growing demand.

Operational Challenges and Cost Structure

Project launch costs and early-stage project inefficiencies negatively impacted the manufacturing margin rate. Rachele Lehr, CFO, noted that most of these costs are expected to be incurred in the first half of 2026. "We're investing in our business to drive growth," she said, highlighting the company's efforts to improve operational efficiency.

Outlook and Guidance

Mayville Engineering expects net sales to increase relative to 2025, along with margin expansion and improved free cash flow in 2026. Analysts estimate next year's revenue growth at 8.9%. The company's guidance assumes an improvement in legacy end markets, particularly in the second half of the year.

Valuation and multiples

With a P/S Ratio of 0.71 and EV/EBITDA of 14.53, Mayville Engineering's valuation appears reasonable. The company's Free Cash Flow Yield is 6.91%, indicating a decent return for investors. However, the ROE is -3.3%, and the Net Debt/EBITDA ratio is 5.5, which may raise concerns about the company's debt levels.

Data Center Business and Cross-Selling Synergies

Jagadeesh Reddy, President and CEO, highlighted the company's growing data center business, with a strong pipeline and new customer wins. The company expects data center business to represent more than 20% of revenue, with adjusted EBITDA margins of 20% to 22%. Cross-selling synergies are expected to contribute to growth, with $40 million to $50 million in projects scheduled to launch in 2026.

3. NewsRoom

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Mayville Engineering Q4 Earnings Call Highlights

Mar -06

Source: defenseworld.net

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Mayville Engineering's Tumble Represents A Buying Opportunity

Mar -04

Source: seekingalpha.com

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Mayville Engineering Company, Inc. (MEC) Q4 2025 Earnings Call Transcript

Mar -04

Source: seekingalpha.com

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Mayville Engineering (MEC) Reports Q4 Loss, Beats Revenue Estimates

Mar -04

Source: zacks.com

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Contrasting SKK (NASDAQ:SKK) and Mayville Engineering (NYSE:MEC)

Feb -08

Source: defenseworld.net

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Critical Review: SKK (NASDAQ:SKK) versus Mayville Engineering (NYSE:MEC)

Jan -11

Source: defenseworld.net

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Mayville Engineering Company, Inc. (NYSE:MEC) Given Consensus Recommendation of “Buy” by Analysts

Jan -04

Source: defenseworld.net

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Mayville Engineering (NYSE:MEC) vs. Skyline Builders Group (NASDAQ:SKBL) Critical Survey

Jan -03

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.51%)

6. Segments

Fabrication

Expected Growth: 2.5%

Mayville Engineering's 2.5% growth in fabrication is driven by increasing demand for precision metal components in the aerospace and defense industries, coupled with the company's strategic investments in advanced manufacturing technologies and process efficiencies. Additionally, growing customer relationships and a strong backlog of orders contribute to this growth.

Performance Structures

Expected Growth: 2.8%

Mayville Engineering Company's 2.8% growth is driven by increasing demand for precision engineered components, strategic acquisitions, and expansion into new markets. Additionally, operational efficiencies and cost savings initiatives have contributed to the company's improved performance. Strong relationships with key customers and a focus on innovative product development have also supported revenue growth.

Tube

Expected Growth: 2.2%

Mayville Engineering's tube segment growth of 2.2% is driven by increasing demand for heavy-duty trucking and construction equipment, as well as growing adoption of electric vehicles. Additionally, the company's focus on product innovation, cost reduction initiatives, and strategic acquisitions have contributed to its growth momentum.

Tank

Expected Growth: 2.9%

Mayville Engineering's Tank segment growth of 2.9% is driven by increasing demand for heavy machinery in construction and mining industries, coupled with the company's strategic expansion into new geographic markets and product diversification. Additionally, investments in research and development have led to innovative tank designs, enhancing the company's competitive edge.

Intercompany Sales Elimination

Expected Growth: 0.5%

Mayville Engineering Company, Inc.'s 0.5% intercompany sales elimination growth is driven by increased vertical integration, improved supply chain management, and reduced transfer pricing. This rational is supported by the company's efforts to optimize its production process, minimize costs, and enhance operational efficiency.

Outdoor Sports

Expected Growth: 3.5%

The 3.5% growth in Outdoor Sports from Mayville Engineering Company, Inc. is driven by increasing consumer participation in outdoor activities, rising demand for eco-friendly and sustainable products, and innovative product developments in camping, hiking, and cycling gear. Additionally, strategic partnerships and expanding distribution channels contribute to the segment's growth.

7. Detailed Products

Fabrication

Custom metal fabrication services for a wide range of industries, including agriculture, construction, and industrial equipment.

Coatings

Specialized coating services, including e-coat, powder coat, and liquid paint, to protect and enhance the durability of metal products.

Assembly

Complete assembly services, including mechanical, hydraulic, and electrical assembly, for complex products and systems.

Prototyping

Rapid prototyping services to quickly and cost-effectively develop and test new product designs.

Testing and Inspection

Comprehensive testing and inspection services to ensure the quality and reliability of products.

Supply Chain Management

End-to-end supply chain management services to optimize logistics, inventory management, and distribution.

8. Mayville Engineering Company, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes is moderate due to the availability of alternative engineering services in the market.

Bargaining Power Of Customers

The bargaining power of customers is high due to the presence of large and established clients who can negotiate prices and terms.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the availability of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants is moderate due to the moderate barriers to entry and the availability of resources and technology.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of established competitors and the need to differentiate the company's services.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 39.95%
Debt Cost 6.90%
Equity Weight 60.05%
Equity Cost 8.10%
WACC 7.62%
Leverage 66.53%

11. Quality Control: Mayville Engineering Company, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Insteel Industries

A-Score: 6.0/10

Value: 5.2

Growth: 4.3

Quality: 6.2

Yield: 8.0

Momentum: 7.0

Volatility: 5.3

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Northwest Pipe

A-Score: 4.9/10

Value: 5.5

Growth: 6.6

Quality: 5.2

Yield: 0.0

Momentum: 6.0

Volatility: 6.0

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Proto Labs

A-Score: 4.4/10

Value: 3.3

Growth: 3.8

Quality: 6.1

Yield: 0.0

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Volatility: 5.0

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Mayville Engineering Company

A-Score: 4.3/10

Value: 6.5

Growth: 7.4

Quality: 3.6

Yield: 0.0

Momentum: 5.0

Volatility: 3.3

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CompoSecure

A-Score: 4.0/10

Value: 4.0

Growth: 1.4

Quality: 4.3

Yield: 1.0

Momentum: 9.0

Volatility: 4.0

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Tredegar

A-Score: 3.9/10

Value: 6.8

Growth: 1.1

Quality: 2.8

Yield: 2.0

Momentum: 7.0

Volatility: 4.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

17.89$

Current Price

17.89$

Potential

-0.00%

Expected Cash-Flows