Mayville Engineering’s first quarter results reflected ongoing challenges across its key end markets, with management citing broad-based customer inventory destocking and softer demand as primary contributors to the year-over-year sales decline. CEO Jag Reddy noted, “Our team's commitment to the MBX framework culture of continuous improvement and cost discipline contributed 140 basis points in sequential adjusted EBITDA margin improvement.” Despite these operational gains, the company’s commercial vehicle, agricultural, and construction segments each experienced double-digit declines, and management acknowledged persistent uncertainty in the broader macroeconomic environment.
Is now the time to buy MEC? Find out in our full research report (it’s free).
Mayville Engineering (MEC) Q1 CY2025 Highlights:
- Revenue: $135.6 million vs analyst estimates of $134.5 million (15.9% year-on-year decline, 0.8% beat)
- Adjusted EPS: $0.04 vs analyst estimates of $0.02 ($0.02 beat)
- Adjusted EBITDA: $12.16 million vs analyst estimates of $11.66 million (9% margin, 4.3% beat)
- The company reconfirmed its revenue guidance for the full year of $575 million at the midpoint
- EBITDA guidance for the full year is $63 million at the midpoint, above analyst estimates of $59.25 million
- Operating Margin: 1.2%, down from 4.7% in the same quarter last year
- Market Capitalization: $323.5 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 Mayville Engineering’s Q1 Earnings Call
- Ross Sparenblek (William Blair) asked about the cadence of end market demand for the second half of the year. CEO Jag Reddy responded that commercial vehicles may see a modest uptick, while powersports and agriculture are expected to remain steady.
- Sparenblek (William Blair) inquired about how reshoring and tariff dynamics could influence customer onboarding timelines. Reddy explained that if tariffs remain in place, new programs could ramp up within three to four months, potentially impacting late 2025 results.
- Ted Jackson (Northland Capital Markets) questioned the drivers behind improved guidance for military and other segments. Reddy highlighted strong execution, new project wins, and an expected mid-teens increase in military sales, while reiterating guidance does not assume a recession or regulatory change.
- Natalia Bak (Citigroup, for Andy Kaplowitz) probed whether customer conversations have become more cautious. Reddy acknowledged muted activity in ag and powersports due to destocking, but noted robust engagement for new business opportunities elsewhere.
- Ross Sparenblek (William Blair) pressed for detail on the mix and momentum of new business wins. Reddy reported $35–40 million already booked year-to-date, with most growth coming from existing customers but a strengthening pipeline with new entrants.
Catalysts in Upcoming Quarters
In coming quarters, our analysts will be watching (1) signs of stabilization or improvement in commercial vehicle and construction demand, (2) incremental new business wins, particularly from OEM reshoring activity and military contracts, and (3) the pace and impact of cost reduction efforts under the MBX framework. The ability to execute M&A for diversification and respond rapidly to policy or macroeconomic changes will also be important signposts.
Mayville Engineering currently trades at $15.81, up from $13.24 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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