Mayville Engineering 2025 Q1 Earnings Misses Targets as Net Income Plummets 99.4%

Mayville Engineering (MEC) reported its fiscal 2025 Q1 earnings on May 07th, 2025. Mayville Engineering's first-quarter results showed a stark decline in net income compared to last year, missing expectations with a 99.4% decrease. Despite the drop in sales, MEC maintained its full-year guidance, anticipating robust demand in the Military sector and less cyclical markets. Analysts had predicted a slight revenue beat, which was confirmed with revenues surpassing estimates by 0.8%. The guidance remains in line with previous projections, reflecting the company's strategic focus amid economic uncertainties.

Revenue

The total revenue for Mayville Engineering in the first quarter of 2025 dropped by 15.9% to $135.58 million from $161.27 million in the same quarter of the previous year. The Outdoor Sports segment contributed $1.78 million, while Fabrication brought in $67.86 million. Revenue from Performance Structures was $43.33 million, Tube accounted for $16.51 million, and Tank added $9.89 million. Intercompany sales were eliminated, deducting $3.80 million, resulting in net sales of $135.58 million.

Earnings/Net Income

Mayville Engineering reported stable earnings per share (EPS) of $0.00 in Q1 2025, consistent with Q1 2024. However, the company's net income significantly decreased to $20,000, down 99.4% from $3.24 million reported in the previous year. The EPS performance reflects unfavorable conditions.

Price Action

The stock price of Mayville Engineering fell 8.15% during the latest trading day but has increased slightly by 0.55% over the most recent full trading week and is up 2.23% month-to-date.

Post-Earnings Price Action Review

Mayville Engineering's stock has experienced significant volatility following its earnings report. Although the strategy of purchasing MEC shares after a revenue raise and holding for 30 days has historically resulted in a 145% total return over the past five years, recent performance has been less stable. While the stock saw a substantial 24% decline in the last quarter, it has also plunged 45.6% from its peak in early 2025. This volatility has raised concerns regarding its future trajectory. Nevertheless, the company has demonstrated resilience through strategic initiatives, such as acquiring Mid-States Aluminium, which indicates potential for growth. Despite the challenges, Mayville Engineering's long-term performance remains strong, having transitioned from losses to profitability over the past five years.

CEO Commentary

Jagadeesh Reddy, CEO of Mayville Engineering, praised the company's strong execution and operational discipline, which led to a 12% sequential sales growth despite softer customer demand. He highlighted the MBX framework's impact on improving adjusted EBITDA margins by 140 basis points. Reddy emphasized the importance of maintaining full-year guidance, driven by positive demand in the Military sector and ongoing customer engagement amid regulatory uncertainties. He expressed confidence in the company's competitive position due to its domestic manufacturing footprint and highlighted proactive measures to adapt to shifting market dynamics while preparing for potential changes in trade policy.

Guidance

Mayville Engineering is maintaining its 2025 financial guidance, expecting net sales between $560 million and $590 million, adjusted EBITDA of $60 million to $66 million, and free cash flow of $43 million to $50 million. The company anticipates a decrease in sales across several end markets, including mid-20% for Agriculture, mid-single to low-double digits for Powersports, and low single digits for Commercial Vehicles, while projecting a mid-teens increase for Military. The guidance does not incorporate potential recession impacts or changes in commercial vehicle emissions regulations.

Additional News

Mayville Engineering has been actively engaging in strategic maneuvers to bolster its market position, including the acquisition of Mid-States Aluminium, which enhances its manufacturing capabilities and expands its footprint in the aluminum extrusion market. Furthermore, the company has repurchased $1.7 million of its common stock under its share repurchase program, with $17.4 million remaining under current authorization. These moves underscore MEC's commitment to strategic growth and shareholder value. Additionally, CEO Jagadeesh Reddy has expressed confidence in leveraging evolving U.S. trade policy and onshoring trends to drive future growth, focusing on high-value opportunities and strong customer engagement.