Mayville Engineering's Accu-Fab Deal: A Strategic Play for Dominance in High-Growth Markets

Investors seeking exposure to high-growth sectors like critical power infrastructure, data centers, and renewable energy should take note: Mayville Engineering Company (MEC) is executing a bold move to accelerate its trajectory. The acquisition of Accu-Fab, LLC from Tide Rock—announced May 26, 2025—represents more than a typical M&A deal. It's a calculated step to diversify into markets with robust tailwinds, while delivering immediate financial upside and long-term strategic leverage.

The Strategic Rationale: Building for the Future

Mayville has long been a leader in precision machining and metal forming, but its core markets—industrial equipment and automotive—have faced cyclical headwinds. The Accu-Fab acquisition flips the script, positioning MEC to capitalize on secular trends in energy transition and digital infrastructure.

Accu-Fab's customer base includes top-tier original equipment manufacturers (OEMs) serving data centers, power distribution systems, and renewable energy projects. These sectors are booming: global data center spending is projected to hit $280 billion by 2027, while U.S. investments in critical power infrastructure are being turbocharged by federal incentives. By acquiring Accu-Fab's vertically integrated operations—200,000 sq. ft. of facilities and a reputation for precision—Mayville gains a platform to serve these high-margin markets directly.

The acquisition also aligns with MEC's “MBX” framework, a proprietary playbook for maximizing returns through operational excellence. Jag Reddy, MEC's CEO, emphasized the “complementary” nature of Accu-Fab's capabilities to Mayville's existing strengths. The goal? To generate $3–$5 million in revenue synergies and $1 million in cost savings by 2026, while scaling Accu-Fab's sales from $61 million to $28–$32 million in its first year under MEC's ownership.

The Financial Case: Immediate Accretion and Margin Expansion

The numbers here are compelling. Accu-Fab delivered a 23% EBITDA margin in 2024, far above Mayville's current 16% margin. MEC expects the acquisition to be immediately accretive to Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted EPS—a rare trifecta in today's market.

Even after factoring in $140.5 million in upfront consideration (plus borrowing under its $250 million credit facility), MEC's net leverage is projected to drop from an initial 3.0x to 1.5x–2.0x within 18 months. That's a clear signal of financial discipline: the company isn't overextending, but instead leveraging its balance sheet to fuel growth while maintaining flexibility.

The Market Play: Betting on Reshoring and Energy Transition

This deal isn't just about MEC's portfolio—it's a bet on two megatrends reshaping manufacturing: U.S. reshoring and energy transition.

1. Reshoring: Companies are increasingly moving production back to North America to reduce supply chain risks and tap into government incentives. Accu-Fab's U.S.-based facilities position MEC to capitalize on this trend, avoiding the volatility of offshore operations.
2. Energy Transition: The shift to renewable energy and grid modernization requires advanced components—exactly what Accu-Fab supplies. MEC's ability to serve this demand will only grow as federal spending on energy infrastructure accelerates.

Risks? Consider the Reward

No deal is risk-free. Integration execution is critical, and macroeconomic headwinds could dampen demand for both data centers and power infrastructure. But MEC's track record—its 2023 acquisition of Advanced Metal Solutions generated $2.5 million in synergies in its first year—suggests it can deliver on its targets.

Meanwhile, the valuation appears prudent. Accu-Fab's 2024 EBITDA of $14 million implies a 10x multiple, which is reasonable given its growth profile and Mayville's ability to unlock value.

Final Take: A Clear Buy Signal

The Accu-Fab acquisition isn't just a diversification play—it's a catalyst for Mayville to become a leader in high-margin, high-growth markets. With immediate accretion, a path to margin expansion, and tailwinds from reshoring and energy transition, this deal deserves investor attention.

Action Item: Attend MEC's May 27 conference call to hear Reddy's outlook firsthand. For long-term investors, this could be the start of a multiyear growth story.

The stock's performance since May 2024 (see chart above) hints at early optimism, but the real upside may be ahead. In a market starved for companies with both earnings power and secular tailwinds, Mayville Engineering is now worth a closer look.