Mayville Engineering's Q2 2025: Key Contradictions in Market Outlooks and Margin Guidance

Commercial vehicle market outlook, agriculture market recovery timeline, 2025 margin guidance and expectations, commercial vehicle market outlook and inventory levels, powersports market recovery are the key contradictions discussed in Mayville Engineering's latest 2025Q2 earnings call.



Revenue and Earnings Performance:
- Mayville Engineering Company (MEC) saw a 19.1% decline in net sales for Q2 2025, with adjusted EBITDA margin expanding by 130 basis points sequentially.
- The reduction in revenue was due to soft customer demand across key end markets, particularly the commercial vehicle (CV) sector, despite cost management initiatives.

Commercial Growth Strategy:
- MEC completed the acquisition of Accu-Fab at the beginning of July, with the transaction expected to be modestly accretive to earnings this year.
- The acquisition increases MEC's estimated serviceable addressable market by 60% to approximately $8 billion, providing access to critical power and data center end markets with long-term secular tailwinds.

End Market Trends and Outlook:
- Customer orders in key end markets, such as commercial vehicle, powersports, and agriculture, remain soft, with channel inventory levels prolonging destocking cycles.
- The most recent ACT forecast projects a 24% decline in commercial vehicle production for 2025, affecting MEC's business significantly.

Cost Management and Efficiency:
- MEC's free cash flow conversion was 92% of adjusted EBITDA in Q2 2025, with efforts to reduce fixed costs and rationalize asset capacity to optimize manufacturing footprint.
- The company aims to repay debt and target a net leverage below 2x by the end of 2026, focusing on operational efficiencies and strategic value-based pricing initiatives.