Mayville Engineering (MEC) Earnings Transcript

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Wednesday, March 4, 2026 astatine 10 a.m. ET

• Chief Executive Officer — Jagadeesh Reddy

• Chief Financial Officer — Rachele Lehr

Jagadeesh Reddy: Thank you, Stefan, and bully morning, everyone. The 4th fourth represented a transitional play for Mayville Engineering Company, Inc. While request successful our bequest extremity markets remained muted during what is typically a seasonally softer quarter, our squad remained focused connected positioning the concern for palmy execution and maturation arsenic we participate 2026. Over the past six months, we person experienced robust and sustained request momentum wrong our information halfway and captious powerfulness extremity market. In response, we person proactively reallocated disposable capableness and resources to enactment palmy task launches and conscionable the evolving needs of our OEM customers successful this market. As a effect of these actions, our 4th fourth borderline show was pressured.

We incurred and retained outgo that would typically beryllium flexed with softer demand, reflecting deliberate investments to enactment programme readiness and execution. Importantly, this borderline unit is chiefly driven by early-stage task inefficiencies and task motorboat costs arsenic we hole for higher-volume programs alternatively than pricing oregon structural outgo challenges. As these programs ramp and utilization improves, we expect margins to normalize successful enactment with our semipermanent expectations. These borderline dynamics are transitory successful quality and, importantly, presumption Mayville Engineering Company, Inc. to present profitable maturation successful 2026 and beyond arsenic we seizure request successful the rapidly expanding information halfway and captious powerfulness market.

In addition, we stay focused connected executing our MBX operational excellence framework, driving disciplined process improvements crossed our plants, and advancing initiatives to optimize and rationalize our manufacturing footprint, which we expect volition further heighten operating leverage arsenic extremity marketplace request recovers.

Now turning to a reappraisal of our cardinal markets and the respective extremity marketplace outlooks. Starting with commercialized vehicle, we proceed to spot nett income to this extremity marketplace declining astir 19% versus the prior-year period. In their astir caller report, ACT has revised its full-year 2026 outlook upwards, present projecting a 3.4% summation successful Class 8 accumulation successful 2026. This improved outlook reflects greater clarity surrounding the 2027 EPA emanation standards, resulting successful anticipated pre-buy enactment and improved macroeconomic conditions. In contrast, our operation and entree marketplace revenues accrued astir 15% twelvemonth implicit twelvemonth during the quarter. This is supported by the AccuFab acquisition and beardown nonresidential activity.