Mayville Engineering Company Reports First Quarter 2025 Financial Results
Mayville Engineering Company, a leading provider of design, prototyping, and manufacturing solutions, announced its results for the three-month period ending March 31, 2025. The Company, which serves diverse end markets, showed solid financial performance despite facing challenges like softer customer demand and inventory de-stocking. The results highlight MEC’s ability to drive operational excellence, manage costs efficiently, and maintain a strong financial position amid macroeconomic uncertainty.
First Quarter 2025 Results
For the three months ended March 31, 2025, MEC reported the following results compared to the prior-year period:
- Net Sales: $135.6 million, reflecting a decrease of 15.9% year-over-year.
- GAAP Net Income: $20 thousand, or $0.00 per diluted share, compared to $3.2 million, or $0.16 per diluted share in the prior-year period.
- Non-GAAP Adjusted Net Income: $1.0 million, or $0.04 per diluted share, down from $4.6 million, or $0.22 per diluted share, year-over-year.
- Adjusted EBITDA: $12.2 million, representing a 9.0% margin, compared to $18.5 million, or 11.5% of net sales, in the prior year.
- Adjusted EBITDA Margin: 9.0% of net sales, a decrease from 11.5% in the prior-year period.
- Free Cash Flow: $5.4 million, compared to $7.9 million in the first quarter of 2024.
- Net Debt to Trailing Twelve-Month Adjusted EBITDA Ratio: 1.4x as of March 31, 2025.
- Capital Expenditures: Increased by $0.2 million year-over-year.
Despite a softer demand environment in the first quarter of 2025, MEC was able to generate positive free cash flow and manage its balance sheet effectively.
Management Commentary
Jag Reddy, President and Chief Executive Officer of Mayville Engineering, commented on the results:
“Our strong first-quarter performance demonstrates the operational discipline and execution of our team. We achieved 12% sequential sales growth, expanded margins, and delivered positive free cash flow, despite the challenges of softer customer demand and continued inventory de-stocking,” said Reddy. “Our focus on continuous improvement, cost control, and operational efficiencies allowed us to improve our Adjusted EBITDA margin by 140 basis points sequentially. This positions us well to achieve increased operating leverage as customer demand recovers.”
Reddy continued, “While the near-term economic environment remains uncertain, we remain confident in MEC’s position to benefit from evolving U.S. trade policy and the ongoing trend of onshoring manufacturing. Our domestic operations limit our exposure to tariff-related risks, positioning us to remain competitive as these policy shifts take effect. We are seeing continued engagement from both new and existing customers, and our business development team is actively pursuing several higher-value opportunities. We remain on track to meet our goal of securing $100 million in new project awards this year.”
“We are also pleased with our strategic pricing, commercial growth, and capital efficiency initiatives. These actions, executed through our MBX value creation framework, will support our efforts to deliver sustainable and profitable growth,” Reddy added. “We are focused on a disciplined approach to capital allocation and will continue to explore inorganic growth opportunities while returning capital to shareholders. Our team’s ability to generate strong profitability in a dynamic environment underscores our resilience and strategic positioning for long-term value creation.”
Operational Highlights and Performance Summary
MEC faced challenges in its key end markets during the first quarter, resulting in a year-over-year decrease in net sales. Net sales were $135.6 million, representing a decline of 15.9% compared to the first quarter of 2024. This drop was mainly driven by lower customer demand across MEC’s primary markets and inventory de-stocking by customers. However, the Company saw positive contributions from new projects in the Other end market and an uptick in after-market demand in its Military segment.
Manufacturing Margin and Profitability
The manufacturing margin for the first quarter of 2025 was $15.3 million, or 11.3% of net sales, compared to $20.9 million, or 13.0% of net sales, in the same period last year. This decline was attributed to weaker customer demand, although the Mayville Company’s cost-reduction initiatives helped offset some of the impact. MEC’s ability to maintain a robust manufacturing margin amid challenging conditions is a testament to its operational agility.
Selling, General, and Administrative Expenses
Bonuses and deferred compensation expense decreased to $3.3 million for the first quarter of 2025, compared to $3.8 million in the prior-year period. However, other selling, general, and administrative (SG&A) expenses increased to $8.7 million in the first quarter of 2025, up from $7.8 million in the same period last year. The rise in SG&A was primarily due to normal wage inflation and higher costs associated with compliance requirements, market analysis studies, and consulting fees.
Interest Expense and Financing Costs
Interest expense decreased to $1.6 million for the first quarter of 2025, down from $3.4 million in the prior year. The reduction in interest expense was driven by a decrease in borrowings and lower interest rates compared to the first quarter of 2024, further improving the Mayville Company’s financial position.
Adjusted EBITDA and Profitability Metrics
MEC reported Adjusted EBITDA of $12.2 million, or 9.0% of net sales, in the first quarter of 2025, a decline from $18.5 million, or 11.5% of net sales, in the prior-year period. The decrease in Adjusted EBITDA was primarily the result of lower customer demand, although cost rationalization measures helped mitigate the impact.
Free Cash Flow and Capital Allocation
MEC generated $5.4 million in free cash flow during the first quarter of 2025, compared to $7.9 million in the same period of 2024. The decline in free cash flow was mainly due to a $2.3 million decrease in net cash provided by operating activities and a $0.2 million increase in capital expenditures. Despite these headwinds, the Mayville Company remained committed to maintaining a strong balance sheet and continued its disciplined approach to capital allocation.
Share Repurchase Program and Capital Return
MEC repurchased $1.7 million of its common stock during the first quarter of 2025 under its share repurchase program. As of the end of the first quarter, the Mayville Company had $17.4 million remaining under its existing repurchase authorization. This demonstrates MEC’s commitment to returning capital to shareholders while maintaining a lean balance sheet.
Outlook for Full-Year 2025
Looking ahead, MEC has reaffirmed its full-year 2025 guidance. The Company expects continued strong execution and robust demand in its less cyclical Military and Other end markets, which should offset softness in the Commercial Vehicle, Powersports, and Construction & Access segments. While macroeconomic uncertainty and evolving regulatory dynamics may impact customer demand in the second half of the year, MEC has proactively developed contingency plans to ensure agility and optimize its cost structure across a range of demand scenarios.
Reddy concluded, “Our outlook for the full year remains unchanged. While we recognize the potential challenges posed by increasing macroeconomic uncertainty, we are confident in MEC’s ability to navigate this dynamic environment. Our strategic initiatives, disciplined cost management, and strong customer relationships position us well for continued long-term value creation, regardless of short-term fluctuations in the market.”
Mayville Engineering Company’s first-quarter results reflect the Company’s operational strength and ability to execute in a challenging environment. The Mayville Company remains well-positioned for future growth, driven by its strategic focus on higher-value opportunities, cost efficiency, and capital allocation discipline. Despite facing short-term headwinds, MEC continues to deliver solid results and is confident in its ability to generate sustainable long-term value for shareholders.
About Mayville Engineering Company
Mayville Engineering Company (MEC) is a leading value-added provider of design, prototyping, and manufacturing solutions, serving diverse end markets Mayville including military, commercial vehicle, powersports, and construction. With a strong domestic footprint and a commitment to operational excellence, MEC is well-positioned to deliver high-quality products and solutions that meet the evolving needs of its customers. For more information, please visit www.mayvilleengineering.com.
