Mayville Engineering Q3 earnings rebound to $424K
Nine-month adjusted EBITDA and free cash flow declined even as third-quarter sales and net income improved.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Mayville Engineering Company, Inc. (MEC) reported third-quarter 2026 net sales of $170.358 million, up 18.1% year over year, and net income of $424,000, versus a $2.675 million loss. Adjusted EBITDA was $16.958 million, compared with $14.081 million; its margin was 10.0%, versus 9.8%. Sales growth came from datacenter and critical power, commercial vehicle, and construction and access markets.
For the first nine months, sales rose 16.0% to $478.119 million, while adjusted EBITDA fell 10.2% to $36.605 million and net loss widened to $9.846 million from $3.752 million. Free cash flow was negative $16.937 million, versus positive $16.751 million, and capital spending was $19.942 million. At September 30, borrowings were $130.174 million and revolving-facility availability was $30.344 million; MEC reported covenant compliance. On October 1, MEC acquired substantially all Augusta Coating assets for approximately $11.0 million in cash, subject to customary adjustments including a net working capital adjustment. MEC said valuation and acquisition accounting remained incomplete.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter sales increased 18.1% to $170.358 million.
- Moderate pointThird-quarter net income reached $424,000, versus a $2.675 million loss.
Negative
- Moderate pointNine-month adjusted EBITDA declined 10.2% to $36.605 million.
- Moderate pointNine-month net loss widened to $9.846 million from $3.752 million.
- Moderate pointFree cash flow was negative $16.937 million, versus positive $16.751 million.
Filing Explained
MEC reports
Key Figures
Key Terms
Adjusted EBITDA financial
Free Cash Flow financial
SOFR-based floating rate borrowings financial
contract assets financial
Relative Total Shareholder Return financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How did MEC perform in the third quarter of 2026?
Why did MEC's nine-month manufacturing margin percentage decline?
What are the terms of MEC's Augusta Coating acquisition?
What were MEC's revolving credit availability and covenant ratios at September 30, 2026?
What capital expenditures did MEC expect for 2026?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
| | | | |
|---|---|---|---|---|
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | ☒ | |
Non-accelerated filer | ☐ | Smaller reporting company | |
Emerging growth company |
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of October 31, 2026, the registrant had
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Table of Contents
Page | ||
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PART I. | FINANCIAL INFORMATION | 5 |
Item 1. | Financial Statements (Unaudited) | 5 |
| ||
| Condensed Consolidated Balance Sheets | 5 |
| | |
| Condensed Consolidated Statements of Comprehensive Income (Loss) | 6 |
| | |
| Condensed Consolidated Statements of Cash Flows | 7 |
| | |
| Condensed Consolidated Statements of Shareholders’ Equity | 9 |
| | |
| Notes to Condensed Consolidated Financial Statements | 10 |
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 |
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 31 |
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Item 4. | Controls and Procedures | 31 |
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PART II. | OTHER INFORMATION | |
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Item 1. | Legal Proceedings | 32 |
| | |
Item 1A. | Risk Factors | 32 |
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 32 |
| | |
Item 5. | Other Information | 32 |
| | |
Item 6. | Exhibits | 33 |
| ||
Signatures | 34 |
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this Quarterly Report on Form 10-Q contain forward-looking statements that involve risks and uncertainties, such as statements related to future events, business strategy, future performance, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek,” “anticipate,” “plan,” “continue,” “estimate,” “expect,” “may,” “will,” “project,” “predict,” “potential,” “targeting,” “intend,” “could,” “might,” “should,” “believe” and similar expressions or their negative. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on management’s belief, based on currently available information, as to the outcome and timing of future events. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed in such forward-looking statements. Mayville Engineering Company, Inc. (MEC, the Company, we, our, us or similar terms) believes the expectations reflected in the forward-looking statements contained in this Quarterly Report on Form 10-Q are reasonable, but no assurance can be given that these expectations will prove to be correct. Forward-looking statements should not be unduly relied upon.
Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements include, but are not limited to, those described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the SEC) on March 4, 2026, as such may be amended or supplemented in Part II, Item 1A of our subsequently filed Quarterly Reports on Form 10-Q (including this report) and the following:
| ● | macroeconomic conditions, including inflation, elevated interest rates, labor availability, material cost pressures, trade policy uncertainty and inconsistent customer demand, have had, and may continue to have, a negative impact on our business, financial condition, cash flows and results of operations (including future uncertain impacts); |
| ● | risks relating to developments in the industries in which our customers operate; |
| ● | risks related to scheduling production accurately and maximizing efficiency; |
| ● | our ability to realize net sales represented by our awarded business; |
| ● | failure to compete successfully in our markets; |
| ● | our ability to maintain our manufacturing, engineering and technological expertise; |
| ● | the loss of any of our large customers or the loss of their respective market shares; |
| ● | risks related to entering new markets; |
| ● | our ability to recruit and retain our key executive officers, managers and trade-skilled personnel; |
| ● | macroeconomic conditions impacting datacenter & critical power end-market demand; |
| ● | volatility in the prices or availability of raw materials critical to our business; |
| ● | manufacturing risks, including delays and technical problems, issues with third-party suppliers, environmental risks and applicable statutory and regulatory requirements; |
| ● | our ability to successfully identify or integrate acquisitions; |
| ● | geopolitical and economic developments, including foreign trade relations and associated tariffs; |
| ● | our ability to develop new and innovative processes and gain customer acceptance of such processes; |
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| ● | risks related to our information technology systems and infrastructure; |
| ● | results of legal disputes, including product liability, intellectual property infringement and other claims; |
| ● | risks associated with our capital-intensive industry; |
| ● | risks related to our employee stock ownership plan’s treatment as a tax-qualified retirement plan; and |
| ● | our ability to satisfy our current obligations under existing indebtedness. |
These factors are not necessarily all of the important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements. Other unknown or unpredictable factors could also cause actual results or events to differ materially from those expressed in the forward-looking statements. All forward-looking statements attributable to us are qualified in their entirety by this cautionary statement. Forward-looking statements speak only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements after the date on which any such statement is made, whether as a result of new information, future events or otherwise, except as required by federal securities laws.
4
Table of Contents
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Mayville Engineering Company, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
(unaudited)
| | | | | | |
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
ASSETS | | | | | | |
Cash and cash equivalents | | $ | | | $ | |
Receivables, net of allowances for doubtful accounts of $ | |
| | |
| |
Inventories, net | |
| | |
| |
Tooling in progress | |
| | |
| |
Prepaid expenses and other current assets | |
| | |
| |
Total current assets | |
| | |
| |
Property, plant and equipment, net | |
| | |
| |
Assets held for sale | | | | | | |
Goodwill | |
| | |
| |
Intangible assets, net | |
| | |
| |
Operating lease assets | | | | | | |
Other long-term assets | |
| | |
| |
Total assets | | $ | | | $ | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | |
| |
Accounts payable | | $ | | | $ | |
Current portion of operating lease obligation | | | | | | |
Accrued liabilities: | |
| | |
| |
Salaries, wages, and payroll taxes | |
| | |
| |
Bonuses and deferred compensation | |
| | |
| |
Other current liabilities | |
| | |
| |
Total current liabilities | |
| | |
| |
Bank revolving credit notes | |
| | |
| |
Operating lease obligation, less current maturities | | | | | | |
Deferred compensation, less current portion | |
| | |
| |
Deferred income tax liability | |
| | |
| |
Other long-term liabilities | |
| | |
| |
Total liabilities | | | | | | |
Commitments and contingencies (see Note 8) | |
| | |
| |
Common shares, | |
| — | |
| — |
Additional paid-in-capital | |
| | |
| |
Retained earnings | |
| | |
| |
Treasury shares at cost, | |
| ( | |
| ( |
Total shareholders’ equity | |
| | |
| |
Total liabilities and shareholders' equity | | $ | | | $ | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Mayville Engineering Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except share amounts and per share data)
(unaudited)
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Net sales | | $ | | | $ | | | $ | | | $ | |
Cost of sales |
| | |
| | |
| | |
| | |
Amortization of intangible assets | | | | | | |
| | |
| | |
Bonuses and deferred compensation | | | | | | | | | | | | |
Other selling, general and administrative expenses |
| | |
| | | | | | | | |
Impairment of long-lived assets |
| | — |
| | — |
| | |
| | — |
Income (loss) from operations |
| | |
| | |
| | ( |
| | |
Interest expense |
| | ( |
| | ( | | | ( | | | ( |
Loss on extinguishment of debt | | | — | | | — |
| | ( |
| | — |
Income (loss) before taxes |
| | |
| | ( |
| | ( |
| | ( |
Income tax expense (benefit) |
| | |
| | ( |
| | ( |
| | ( |
Net income (loss) and comprehensive income (loss) | | $ | | | $ | ( |
| | ( |
| | ( |
| | | | | | | | | | | | |
Earnings (loss) per share: | |
| | |
| | | | | | | |
Basic | | $ | | | $ | ( | | $ | ( | | $ | ( |
Diluted | | $ | | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | | | | |
Weighted average shares outstanding: | |
| | |
| | | | | | | |
Basic | |
| | |
| | |
| | |
| |
Diluted | |
| | |
| | |
| | |
| |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Mayville Engineering Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| | | | | | |
| | Nine Months Ended | ||||
| | September 30, | ||||
| | 2026 | | 2025 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
Net income (loss) | | $ | ( | | $ | ( |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |
| | |
| |
Depreciation | |
| | | | |
Amortization | |
| | | | |
Allowance for doubtful accounts | |
| | | | |
Inventory excess and obsolescence reserve | |
| | | | ( |
Stock-based compensation expense | |
| | | | |
Loss (gain) on disposal of property, plant and equipment | |
| | | | ( |
Impairment of long-lived assets | |
| | | | — |
Deferred compensation | |
| ( | | | |
Loss on extinguishment of debt | | | | | | — |
Non-cash lease expense | | | | | | |
Other non-cash adjustments | |
| | | | |
Changes in operating assets and liabilities: | |
| | |
| |
Accounts receivable | |
| ( | | | ( |
Inventories | |
| ( | | | ( |
Tooling in progress | |
| | | | |
Prepaids and other current assets | |
| ( | | | ( |
Accounts payable | |
| | | | |
Deferred income taxes | | | ( | | | ( |
Operating lease obligations | | | ( | | | ( |
Accrued liabilities | |
| | | | ( |
Net cash provided by (used in) operating activities | |
| | |
| |
CASH FLOWS FROM INVESTING ACTIVITIES | |
| | |
| |
Purchases of property, plant and equipment | |
| ( | | | ( |
Proceeds from sale of property, plant and equipment | |
| | | | |
Payment for acquisition, net of cash acquired | | | — | | | ( |
Net cash used in investing activities | |
| ( | |
| ( |
CASH FLOWS FROM FINANCING ACTIVITIES | |
| | |
| |
Proceeds from bank revolving credit notes | |
| | | | |
Payments on bank revolving credit notes | |
| ( | | | ( |
Proceeds from stock offering | | | | | | — |
Payments of financing costs | |
| ( | | | ( |
Shares withheld for employees' taxes | |
| ( | | | ( |
Purchase of treasury stock | | | — | | | ( |
Payments on finance leases | |
| ( | | | ( |
Net cash provided by (used in) financing activities | |
| | |
| |
Net increase (decrease) in cash and cash equivalents | |
| | |
| |
Cash and cash equivalents at beginning of period | |
| | |
| |
Cash and cash equivalents at end of period | | $ | | | $ | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Mayville Engineering Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| | | | | | |
| | Nine Months Ended | ||||
| | September 30, | ||||
| | 2026 | | 2025 | ||
Supplemental disclosure of cash flow information: | |
| | |
| |
Cash paid for interest | | $ | | | $ | |
Cash paid for income taxes | | $ | | | $ | |
Non-cash property, plant and equipment | | $ | | | $ | |
In conjunction with the acquisition, assets acquired and liabilities assumed were as follows: | | | | | | |
Assets acquired, net of cash acquired | | $ | — | | $ | |
Liabilities assumed | | | — | | | ( |
Cash paid for acquisition, net of cash acquired | | $ | — | | $ | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Mayville Engineering Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Shareholders’ Equity
(in thousands)
(unaudited)
| | | | | | | | | | | | |
| | Shareholders' Equity | ||||||||||
| | Additional | | Treasury | | Retained | | | ||||
| | Paid-in-Capital | | Shares | | Earnings | | Total | ||||
Balance as of December 31, 2025 | | $ | | | $ | ( | | $ | | | $ | |
Net income (loss) | | | — | | | — | | | ( | | | ( |
Stock-based compensation | | | | | | — | | | — | | | |
Employee tax withholding on restricted stock units | | | ( | | | — | | | — | | | ( |
Balance as of March 31, 2026 | | $ | | | $ | ( | | $ | | | $ | |
Net income (loss) | | | — | | | — | | | ( | | | ( |
Stock-based compensation | | | | | | — | | | — | | | |
Stock offering | | | | | | — | | | — | | | |
Employee tax withholding on restricted stock units | | | | | | — | | | — | | | |
Balance as of June 30, 2026 | | $ | | | $ | ( | | $ | | | $ | |
Net income (loss) | |
| — | |
| — | |
| | |
| |
Purchase of treasury stock | |
| — | |
| — | |
| — | |
| — |
Stock-based compensation | |
| | | | — | | | — | | | |
Employee tax withholding on restricted stock units | | | ( | | | — | | | — | | | ( |
Balance as of September 30, 2026 | | $ | | | $ | ( | | $ | | | $ | |
| | | | | | | | | | | | |
| | Shareholders' Equity | ||||||||||
| | Additional | | Treasury | | Retained | | | ||||
| | Paid-in-Capital | | Shares | | Earnings | | Total | ||||
Balance as of December 31, 2024 | | $ | | | $ | ( | | $ | | | $ | |
Net income | | | — | | | — | | | | | | |
Purchase of treasury stock | | | — | | | ( | | | — | | | ( |
Stock-based compensation | | | | | | — | | | — | | | |
Employee tax withholding on restricted stock units | | | ( | | | — | | | — | | | ( |
Balance as of March 31, 2025 | | $ | | | $ | ( | | $ | | | $ | |
Net loss | |
| — | |
| — | |
| ( | |
| ( |
Purchase of treasury stock | | | — | | | ( | | | — | | | ( |
Stock-based compensation | |
| | |
| — | |
| — | |
| |
Employee tax withholding on stock options exercised | | | ( | | | — | | | — | | | ( |
Balance as of June 30, 2025 | | $ | | | $ | ( | | $ | | | $ | |
Net loss | |
| — | |
| — | |
| ( | |
| ( |
Stock-based compensation | |
| | |
| — | |
| — | |
| |
Employee tax withholding on restricted stock units | | | ( | | | — | | | — | | | ( |
Balance as of September 30, 2025 | | $ | | | $ | ( | | $ | | | $ | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Mayville Engineering Company, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(in thousands except share amounts, per share data, years and ratios)
(unaudited)
Note 1.
The interim unaudited Condensed Consolidated Financial Statements of Mayville Engineering Company, Inc. and subsidiaries (MEC, the Company, we, our, us or similar terms) presented here have been prepared in accordance with the accounting principles generally accepted in the United States of America (GAAP) and with instructions to Form 10-Q and Article 10 of Regulation S-X. They reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations and financial position for the interim unaudited periods presented. All intercompany balances and transactions have been eliminated in consolidation.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These interim unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K. A summary of the Company’s significant accounting policies is included in the Company’s 2025 financial statements in the Annual Report on Form 10-K. The Company followed these policies in preparation of the interim unaudited Condensed Consolidated Financial Statements except for new accounting pronouncements adopted as described below.
Nature of Operations
Mayville Engineering Company, Inc. (MEC) is a leading U.S.-based, vertically-integrated, value-added manufacturing partner providing a full suite of manufacturing solutions from concept to production, including design, prototyping and tooling, fabrication, aluminum extrusion, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, datacenter & critical power, construction & access equipment, powersports, agriculture, military and other end markets. Founded in 1945 and headquartered in Milwaukee, Wisconsin, we are a leading Tier I U.S. supplier of highly engineered components to original equipment manufacturer (OEM) customers with leading positions in their respective markets. The Company maintains
Our
Recently Adopted Accounting Pronouncements
In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2025-06, Intangibles – Goodwill and Other-Internal-Use Software, amending Accounting Standards Codification (ASC) 350. The amendment removes all references to prescriptive and sequential software development stages. In addition, the amendment also requires consideration of whether there is significant uncertainty associated with the development activities of the software during evaluation of a probable-to-complete recognition threshold. ASU 2025-06 is effective for interim and annual periods beginning after December 15, 2027. Entities may adopt the guidance using either a prospective approach (including a modified transition approach) or retrospective approach. Early adoption is permitted. The Company has early adopted ASU 2025-06 on a prospective basis, as of January 1, 2026. The adoption of ASU 2025-06 did not have a material impact on the Company’s consolidated financial statements.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements. The ASU addresses 33 items, representing the changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. Generally, the amendments in this update are not intended to result in significant changes for most entities. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026. Early adoption is permitted. The Company adopted this standard as of January 1, 2026, and the amendments have been applied on a prospective basis where applicable. Adoption of ASU 2025-12 did not have a material impact on the Company’s consolidated financial statements.
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Recently Issued Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Expense Disaggregation Disclosures, amending ASC 220, Income Statement – Reporting Comprehensive Income. The amendment requires an entity to provide a disclosure within the financial statement footnotes showing the disaggregation of certain expenses included in relevant expense captions on the consolidated income statement, with a qualitative description of the amounts that are not separately disaggregated quantitatively. The guidance also requires disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. The guidance is applied on a prospective basis, with a retrospective option and allows for early adoption. The Company is evaluating the potential impact of this guidance on the consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting - Narrow-Scope Improvements, amending ASC 270. The ASU clarifies interim disclosure requirements and the applicability of ASC 270. The objective of the amendments is to provide further clarity about the current interim disclosure requirements. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Adoption of this ASU can be applied either on a prospective or a retrospective approach. Early adoption is permitted. The Company is evaluating the potential impact of this guidance on the condensed consolidated financial statements.
Note 2. Select balance sheet data
Inventory
Inventories are stated at the lower of cost, determined on the first-in, first-out method, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Work-in-process and finished goods are valued at production costs consisting of material, labor and overhead.
Inventories as of September 30, 2026 and December 31, 2025 consist of:
| | | | | | |
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Finished goods and purchased parts | | $ | | | $ | |
Raw materials |
| | |
| | |
Work-in-process |
| | |
| | |
Total | | $ | | | $ | |
Property, Plant and Equipment
Property, plant and equipment as of September 30, 2026 and December 31, 2025 consist of:
| | | | | | | | | |
| | Useful Lives | | September 30, | | December 31, | |||
| | Years | | 2026 | | 2025 | |||
Land | | | Indefinite | | $ | | | $ | |
Land improvements | | | | | | | | | |
Building and building improvements |
| |
| | |
| | | |
Machinery, equipment and tooling |
| | |
| | |
| | |
Vehicles |
| |
| | |
| | | |
Office furniture and fixtures |
| | |
| | |
| | |
Construction in progress |
| | N/A |
| | |
| | |
Total property, plant and equipment, gross |
| | | | | |
| | |
Less accumulated depreciation |
| | | | | |
| | |
Total property, plant and equipment, net | | | | | $ | | | $ | |
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Depreciation expense was $
Goodwill
The following table sets forth the changes in the carrying amount of goodwill as of September 30, 2026. The carrying value of goodwill increased by $
| | | |
Balance as of December 31, 2025 | | $ | |
Changes in goodwill | | | — |
Balance as of March 31, 2026 | | $ | |
Measurement period adjustment | | | |
Balance as of June 30, 2026 | | $ | |
Changes in goodwill | | | — |
Balance as of September 30, 2026 | | $ | |
Intangible Assets
The following is a listing of intangible assets, the useful lives in years (amortization period) and accumulated amortization as of September 30, 2026 and December 31, 2025:
| | | | | | | | | | | | |
| | | | | September 30, 2026 | |||||||
| | Useful Lives | | Gross Carrying | | Accumulated | |
| | |||
| | Years | | Amount | | Amortization | |
| Net | |||
Amortizable intangible assets: | | | | | | | | | | | | |
Customer relationships and contracts | | | | | $ | | | $ | | | $ | |
Trade name |
| |
| | |
| | | | | | |
Developed technology | | | | | | | | | | | | |
Patents |
| |
| | |
| | | | | | |
Non-compete agreements | | | | | | | | | | | | |
Total amortizable intangible assets, net | | | | | $ | | | $ | | | $ | |
Non-amortizable brand name | | | Indefinite | | | | | | — | | | |
Total intangible assets, net |
| | | | $ | |
| $ | | | $ | |
| | | | | | | | | | | | |
| | | | | December 31, 2025 | |||||||
| | Useful Lives | | Gross Carrying | | Accumulated | |
| | |||
| | Years | | Amount | | Amortization | |
| Net | |||
Amortizable intangible assets: | | | | | | | | | | | | |
Customer relationships and contracts | | | | | $ | | | $ | | | $ | |
Trade name |
| |
| | |
| | | | | | |
Developed technology |
| |
| | | | | | | | | |
Patents | | | | | |
| | | | | | |
Non-compete agreements |
| |
| | | | | | | | | |
Total amortizable intangible assets, net | | | | | $ | | | $ | | | $ | |
Non-amortizable brand name | | | Indefinite | | | | | | — | | | |
Total intangible assets, net |
| | | | $ | |
| $ | | | $ | |
Amortization expense was $
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Future amortization expense is expected to be as follows:
| | | |
Year ending December 31, | | | |
2026 (remainder) | | $ | |
2027 | | $ | |
2028 | | $ | |
2029 | | $ | |
2030 | | $ | |
Thereafter | | $ | |
Note 3. Debt
Bank Revolving Credit Notes
On June 28, 2023, we entered into an amended and restated credit agreement (the Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, as administrative agent (the Agent).
On June 26, 2025, we entered into the First Amendment to the Credit Agreement (First Amendment) which increased the amount of total allowable borrowings under the revolving credit facility from $
On February 25, 2026, we entered into the Third Amendment to the Credit Agreement (Third Amendment) which lowered the amount of total allowable borrowings under the revolving credit facility from $
The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on our ability to, subject to certain exceptions, create, incur or assume indebtedness; create, incur, assume or suffer to exist liens; make certain investments; allow our subsidiaries to merge or consolidate with another entity; make certain asset dispositions; pay certain dividends or other distributions to shareholders; enter into transactions with affiliates; enter into sale leaseback transactions; and exceed the limits on annual capital expenditures. The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum consolidated interest coverage ratio of
The Company incurred financing costs of $
At September 30, 2026, our consolidated total leverage ratio under the Credit Agreement was
Under the Credit Agreement, interest is payable quarterly at the adjusted secured overnight financing rate (SOFR) plus an applicable margin based on the current consolidated total leverage ratio (which may be adjusted for certain reserve requirements), plus
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interest based on SOFR. If that happens, we will be required to pay interest at the Base Rate, which is the sum of the higher of (i) the Prime Rate (as publicly announced by the Agent from time to time), (ii) the Federal Funds Rate plus
The Company was in compliance with all financial covenants of its Credit Agreement as of September 30, 2026 and December 31, 2025. The amount borrowed on the revolving credit notes was $
In connection with the Credit Agreement: (i) the Company has pledged, subject to certain exceptions, security interests and liens in and on (a) substantially all its respective personal property assets and (b) certain of its respective real property assets, in each case, to secure the Credit Agreement and related obligations; and (ii) certain of the Company’s subsidiaries have guaranteed the Company’s obligations under the Credit Agreement. The Credit Agreement contains customary events of default. If an event of default under the Credit Agreement occurs, then, the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable and exercise rights and remedies against the pledged collateral.
Other Debt
Additionally, the Company has a Fond du Lac County and Fond du Lac Economic Development Corporation term note (Fond du Lac Term Note). The Fond du Lac Term Note is secured by a security agreement, payable in annual installments of $
Note 4. Leases
The Company has real property operating leases for office and manufacturing space. Operating leases for the Company’s personal property consist of leases for office equipment, vehicles, forklifts and storage tanks for bulk gases. The Company recognizes a right-of-use (ROU) asset and a lease liability for operating leases based on the net present value of future minimum lease payments. Lease expense for the Company’s operating leases is recognized on a straight-line basis over the lease term, including renewal periods that are considered reasonably certain. The Company has not elected to recognize ROU assets or lease liabilities for leases with a term of twelve months or less.
The Company has finance leases for equipment used throughout its office, manufacturing facilities and vehicles used by employees. The Company recognizes an ROU asset and a lease liability for finance leases based on the net present value of future minimum lease payments. Lease expense for the Company’s finance leases are comprised of the amortization of the ROU asset and interest expense recognized based on the effective interest method.
Variable lease expense is related to certain of the Company’s real property leases and personal property leases, and it generally consists of property tax and insurance components that are for the benefit of the lessor (real property leases) and variable overage fees (personal property leases) that are remitted as part of the Company’s lease payments.
During the three and nine months ended September 30, 2026, the Company recorded
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The components of lease expense were as follows:
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Finance lease cost: | | | | | | | | | | | | |
Amortization of finance lease assets | | $ | | | $ | | | $ | | | $ | |
Interest on finance lease liabilities | | | | |
| | | | | |
| |
Total finance lease expense | | | | | | | | | | | | |
Operating lease expense | | | | | | | | | | | | |
Short-term lease expense | | | | | | | | | | | | |
Variable lease expense | | | | |
| | | | | |
| |
Lease income (1) | | | ( | | | ( | | | ( | | | ( |
Total lease expense (income) | | $ | | | $ | | | $ | | | $ | |
| (1) | For the three months ended September 30, 2026, the Company subleased a portion of its Fond du Lac, Wisconsin facility. For the three months ended September 30, 2025, and the nine months ended September 30, 2026 and 2025, the Company subleased portions of its Fond du Lac, Wisconsin and Hazel Park, Michigan facilities. |
Supplemental information related to leases was as follows:
| | | | | | |
| | Nine Months Ended | ||||
| | September 30, | ||||
| | 2026 | | 2025 | ||
Cash paid for amounts included in the measurement of lease liabilities for finance leases: | | | | | | |
Operating cash flows | | $ | | | $ | |
Financing cash flows | | $ | | | $ | |
| | | | | | |
Cash paid for amounts included in the measurement of lease liabilities for operating leases: | | | | | | |
Operating cash flows | | $ | | | $ | |
| |
| | |
| |
Right-of-use assets obtained in exchange for recorded lease obligations: | | | | | | |
Operating leases | | $ | | | $ | |
Finance leases | | $ | | | $ | |
Note 5. Employee stock ownership plan
Under the Mayville Engineering Company, Inc. Employee Stock Ownership Plan (ESOP), the Company can make annual discretionary contributions to the trust for the benefit of eligible employees in the form of cash or shares of common stock of the Company subject to the Board of Directors’ approval. The Company recorded
As of January 1, 2025, the Company amended the plan reducing the distribution period from
Additionally, as of January 1, 2025, the in-service diversification percentage allowed increased from
At various times following death, disability, retirement, termination of employment or the exercise of diversification rights, an ESOP participant is entitled to receive their ESOP account balance in accordance with various distribution methods as permitted under the policies adopted by the ESOP.
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As of September 30, 2026 and December 31, 2025, the ESOP shares consisted of
Note 6. Retirement plans
The Mayville Engineering Company, Inc. 401(k) Plan (the 401(k) Plan) covers substantially all employees meeting certain eligibility requirements. The 401(k) Plan is a defined contribution plan and is intended for eligible employees to defer tax-free contributions to save for retirement. Employees may contribute up to
The Company provides a
Note 7. Income taxes
On a quarterly basis, the Company estimates its effective tax rate for the full fiscal year and records a quarterly income tax provision based on the anticipated rate and adjusted for discrete taxable events that may occur in the quarter. As the year progresses, the Company will refine its estimate based on facts and circumstances by each tax jurisdiction.
Income tax expense (benefit) was $
Uncertain Tax Positions
Based on the Company’s evaluation, there is
The Company files income tax returns in the United States federal jurisdiction and in various state and local jurisdictions. Federal tax returns for tax years beginning January 1, 2022, and state tax returns for the years beginning January 1, 2021, are open for examination.
Note 8. Commitments and contingencies
Litigation
From time to time, the Company may be involved in various claims and lawsuits, both for and against the Company, arising in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, in management’s opinion, either the likelihood of loss is remote, or any reasonably possible loss associated with the resolution of such proceedings is not expected to have a material adverse impact on the condensed consolidated financial statements.
Note 9. Deferred compensation
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An employer contribution will be made for each participant to reflect the amount of any reduced allocations to the ESOP and/or 401(k) employer contributions due solely to the participant’s deferral amounts, as applicable. In addition, a discretionary amount may be awarded to a participant by the Company.
Deferrals are assumed to be invested in an investment vehicle based on the options made available to the participant (which does not include Company stock).
The deferred compensation plan provides benefits payable upon separation of service or death. Payments are to be made 30 days after date of separation from service, either in a lump-sum payment or up to five annual installments as elected by the participant when the participant first elects to defer compensation subject to the terms and conditions of the agreement.
The deferred compensation plan is non-funded, and all future contributions are unsecured in that the employees have the status of a general unsecured creditor of the Company and the agreements constitute a promise by the Company to make benefit payments in the future. During the three and nine months ended September 30, 2026, eligible employees elected to defer compensation of $
Note 10. Self-funded insurance
The Company is self-funded for the medical benefits provided to its employees and their dependents. Healthcare costs are expensed as incurred and are based upon actual claims paid, reinsurance premiums, administration fees and estimated unpaid claims. The Company has an aggregate stop loss limit to mitigate risk. Expenses related to this contract were $
Note 11. Segments
The Company operates as a single reporting unit and single reporting segment, and is managed on a consolidated basis. The Company derives revenue from its customers by providing value-added manufacturing solutions ranging from concept to production, including prototyping and tooling, production fabrication, coating, assembly and aftermarket components. The accounting policies of the Company's
The CODM uses these performance measures to evaluate the Company's profitability, deciding whether to reinvest profits into the segment or into other parts of the entity, such as acquisitions or to buy back Company common stock and monitor budget versus actual results.
All sales are generated and all assets are located within the United States and the business activities are managed at a consolidated level.
The Company’s President, Chief Executive Officer and Director is the CODM.
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Note 12. Fair value of financial instruments
Fair value provides information on what the Company may realize if certain assets were sold or might pay to transfer certain liabilities based upon an exit price. Financial assets and liabilities that are measured and reported at fair value are classified into a three-level hierarchy that prioritizes the inputs used in the valuation process. A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs as follows:
| ● | Level 1 – Quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2 – Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data. Long-term debt is classified as a Level 2 fair value input. |
| ● | Level 3 – Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be the Company’s own data and judgements about assumptions that market participants would use in pricing the asset or liability. |
The following table lists the Company’s financial assets and liabilities accounted for at fair value by the fair value hierarchy:
| | | | | | | | | | | | |
| | Balance at | | Fair Value Measurements at | ||||||||
| | September 30, | | Report Date Using | ||||||||
| | 2026 | | (Level 1) | | (Level 2) | | (Level 3) | ||||
Deferred compensation liability | | $ | | | $ | | | $ | — | | $ | — |
Total | | $ | | | $ | | | $ | — | | $ | — |
| | | | | | | | | | | | |
| | Balance at | | Fair Value Measurements at | ||||||||
| | December 31, | | Report Date Using | ||||||||
| | 2025 | | (Level 1) | | (Level 2) | | (Level 3) | ||||
Deferred compensation liability | | $ | | | $ | | | $ | — | | $ | — |
Total | | $ | | | $ | | | $ | — | | $ | — |
Fair value measurements for the Company’s cash and cash equivalents are classified based upon Level 1 measurements because such measurements are based upon quoted market prices in active markets for identical assets.
Accounts receivable, accounts payable, long-term debt and accrued liabilities are recorded in the Condensed Consolidated Balance Sheets at cost and approximate fair value.
Deferred compensation liabilities are recorded at amounts due to participants at the time of deferral. Deferrals are invested in an investment vehicle based on the options made available to the participant, considered to be Level 1 or Level 2 on the fair value hierarchy, with the current balance all as Level 1. The change in fair value is recorded in the profit sharing, bonuses and deferred compensation line item on the Condensed Consolidated Statements of Comprehensive Income (Loss). The short-term and long-term balances due to participants are reflected on the current portion of deferred compensation and deferred compensation, less current portion line items, respectively, on the Condensed Consolidated Balance Sheets.
The Company’s non-financial assets such as goodwill, intangible assets, property, plant, and equipment and leases are re-measured at fair value when there is an indication of impairment and adjusted only when an impairment charge is recognized. As of September 30, 2026 and December 31, 2025, impairment related to these non-financial assets was recognized as $
Note 13. Earnings per share
The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share. In accordance with ASC 260, outstanding options will be considered to have been exercised and outstanding as of the beginning of the period if the average
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market price of the common stock during the period exceeds the exercise price of the options (they are “in the money”), and the assumed exercise of the options does not have an anti-dilutive impact on earnings per share.
A reconciliation of basic and diluted net income (loss) per share attributable to the Company was as follows:
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Net income (loss) attributable to MEC | | $ | | | $ | ( | | $ | ( | | $ | ( |
Weighted average shares outstanding | | | | | | | | | | | | |
Basic income (loss) per share | | $ | | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | | | | |
Weighted average shares outstanding | | | | | | | | | | | | |
Effect of dilutive stock-based compensation | | | | | | — | | | — | | | — |
Total potential shares outstanding | | | | | | | | | | | | |
Diluted income (loss) per share | | $ | | | $ | ( | | $ | ( | | $ | ( |
The effect of dilutive stock-based compensation excluded due to an anti-dilutive impact on earnings per share was
Note 14. Revenue recognition
Contract Assets and Contract Liabilities
The Company has contract assets and contract liabilities, which are included in tooling in progress and other current liabilities on the Condensed Consolidated Balance Sheets, respectively. Contract assets primarily consist of capitalized costs related to customer-owned tooling contracts, wherein the Company has not yet met performance obligations. Contract liabilities include deferred tooling revenue, where the performance obligation was not met. The performance obligation is satisfied when the tooling is completed and the customer signs off through the Product Part Approval Process or other documented customer acceptance, and the revenue is recognized either at a point in time or over a period of time. Cost of goods sold is recognized and released from the balance sheet when control of the tooling promised under contract is transferred to the customer.
The Company’s contracts with customers are short-term in nature; therefore, revenue is typically recognized, billed and collected within a 12-month period. The following table reflects the changes in our contract assets and liabilities during the nine months ended September 30, 2026:
| | | | | | |
| | Contract | | Contract | ||
| | Assets | | Liabilities | ||
As of December 31, 2025 | | $ | | | $ | |
Net activity | | | ( | | | ( |
As of September 30, 2026 | | $ | | | $ | |
During the nine months ended September 30, 2026, revenue recognized from deferred revenue that was recorded as a contract liability at the beginning of 2026 was $
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Disaggregated Revenue
The following tables represent a disaggregation of revenue by product category and end market:
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
Product Category | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Outdoor sports | | $ | | | $ | | | $ | | | $ | |
Fabrication | | | | | | | | | | | | |
Performance structures | | | | | | | | | | | | |
Tube | | | | | | | | | | | | |
Tank | | | | | | | | | | | | |
Total | | | | | | | | | | | | |
Intercompany sales elimination | | | ( | | | ( | | | ( | | | ( |
Total, net sales | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
End Market | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Commercial vehicle | | $ | | | $ | | | $ | | | $ | |
Datacenter & critical power | | | | | | | | | | | | |
Construction & access | |
| | | | | | | | | | |
Powersports | |
| | | | | | | | | | |
Agriculture | |
| | | | | | | | | | |
Military | | | | | | | | | | | | |
Other | | | | | | | | | | | | |
Total, net sales | | $ | | | $ | | | $ | | | $ | |
Note 15. Concentration of major customers
The following customers accounted for 10% or greater of the Company’s recorded net sales or net trade receivables:
| | | | | | | | | | | | | | | | | | | |
| | Net Sales | | | Net Sales | | | Accounts Receivable | | | |||||||||
| | Three Months Ended | | | Nine Months Ended | | | As of | | | As of | | | ||||||
| | September 30, | | | September 30, | | | September 30, | | | December 31, | | | ||||||
| | 2026 | | | 2025 | | | 2026 | | | 2025 | | | 2026 | | | 2025 | | |
Customer | | | | | | | | | | | | | | | | | | | |
A |
| | % | | | % | | | % | | | % | | % | | % |
| ||
B |
| % | | % | | % | | | % | | % | | % |
| |||||
C |
| % | | % | | % | | % | | % | | | % |
| |||||
Note 16. Stock-based compensation
The Mayville Engineering Company, Inc. 2019 Omnibus Incentive Plan provided the Company the ability to grant monetary payments based on the value of its common stock, up to
On April 20, 2021, shareholders of the Company approved an amendment to the 2019 Omnibus Incentive Plan increasing the number of shares of common stock authorized for issuance by
The total number of shares of the Company’s common stock still available for issuance under the 2019 Omnibus Incentive Plan as of September 30, 2026 is
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The Company recognizes stock-based compensation using the fair value provisions prescribed by ASC 718, Compensation – Stock Compensation. Accordingly, compensation costs for awards of stock-based compensation settled in shares are determined based on the fair value of the stock-based instrument at the time of grant and are recognized as expense over the vesting period of the stock-based instrument. Our stock-based compensation consists of stock options, restricted stock units (RSUs) and performance stock units (PSUs). For all types of units, fair value is equivalent to the adjusted closing stock price at the date of the grant.
Cancellations and forfeitures are accounted for as incurred.
Stock-based compensation expense was $
There were
The Company granted
The performance goals for the PSUs granted in 2026 are weighted
The performance goals for the PSUs granted in 2025 are weighted
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Note 17. Common equity
At September 30, 2026 the authorized stock of the Company consisted of
Changes in outstanding common shares are summarized as follows:
| | |
| | Shares |
| | Outstanding |
Balance as of December 31, 2025 | | |
Treasury stock purchases | | — |
Common stock issued (including stock-based compensation impact) (1) | | |
Balance as of September 30, 2026 | | |
| | |
| | Shares |
| | Outstanding |
Balance as of December 31, 2024 | | |
Treasury stock purchases | | ( |
Common stock issued (including stock-based compensation impact) | | |
Balance as of September 30, 2025 | | |
| (1) | On May 21, 2026, the Company completed a common stock offering which resulted in |
Note 18. Subsequent Events
The Company has evaluated subsequent events since September 30, 2026, the date of these financial statements. There were no material events or transactions discovered during this evaluation that require recognition or disclosure in the financial statements, except as set forth below.
On October 1, 2026, the Company acquired substantially all of the assets of Augusta Coating, Inc. (“Augusta Coating”), a privately held provider of metal coating and finishing services that operates a
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in the understanding and assessing the trends and significant changes in our results of operations and financial condition. Historical results may not be indicative of future performance. This discussion includes forward-looking statements that reflect our plans, estimates and beliefs. Such statements involve risks and uncertainties. Our actual results may differ materially from those contemplated by these forward-looking statements as a result of various factors, including those set forth in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and “Cautionary Statement Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. This discussion should be read in conjunction with our audited Consolidated Financial Statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025 and our unaudited Condensed Consolidated Financial Statements and the notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q. In this discussion, we use certain non-GAAP financial measures. Explanation of these non-GAAP financial measures and reconciliation to the most directly comparable GAAP financial measures are included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations. Investors should not consider non-GAAP financial measures in isolation or as substitutes for financial information presented in compliance with GAAP.
All amounts are presented in thousands except share amounts, per share data, years and ratios.
Overview
MEC is a leading U.S.-based, vertically-integrated, value-added manufacturing partner providing a full suite of manufacturing solutions from concept to production, including design, prototyping and tooling, fabrication, aluminum extrusion, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, datacenter & critical power, construction & access equipment, powersports, agriculture, military and other end markets. We have developed long-standing relationships with our blue-chip customers based upon our commitment to “Unmatched Excellence”.
Our one operating segment focuses on producing metal components that are used in a broad range of heavy- and medium-duty commercial vehicles, datacenter & critical power, construction & access equipment, powersports, agricultural, military and other products.
Macroeconomic Conditions
The broader market dynamics over the past few years have resulted in impacts to the Company including: inflation, elevated interest rates, labor availability, material cost pressures, trade policy uncertainty and inconsistent customer demand. The Company expects some of these dynamics to continue for the remainder of 2026, which could continue to have an impact on demand, material costs and labor.
How We Assess Performance
Net Sales. Net sales reflect sales of our components and products net of allowances for returns and discounts. In addition to the current macroeconomic conditions, several factors affect our net sales in any given period, including weather, timing of acquisitions and the production schedules of our customers. Net sales are recognized at the time of shipment or at delivery to the customer.
Manufacturing Margins. Manufacturing margins represent net sales less cost of sales. Cost of sales consists of all direct and indirect costs used in the manufacturing process, including raw materials, labor, equipment costs, depreciation, lease expenses, subcontract costs and other directly related overhead costs. Our cost of sales is directly affected by the fluctuations in commodity prices, primarily sheet steel and aluminum, but these changes are largely mitigated by contractual agreements with our customers that allow us to pass through these price variations based upon certain market indexes.
Depreciation and Amortization. We carry property, plant and equipment on our balance sheet at cost, net of accumulated depreciation. Depreciation on property, plant and equipment is computed on a straight-line basis over the estimated useful life of the asset. The periodic expense related to leasehold improvements and intangible assets is depreciation and amortization expense, respectively. Leasehold improvements are depreciated over the lesser of the life of the underlying asset or the remaining lease term. Our intangible assets were recognized as a result of certain acquisitions and are generally amortized on a straight-line basis over the estimated useful lives of the assets.
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Other Selling, General and Administrative Expenses. Other selling, general and administrative expenses consist primarily of salaries and personnel costs for our sales and marketing, finance, human resources, information systems, administration and certain other managerial employees and certain corporate level administrative expenses such as audit, accounting, legal and other consulting and professional services, travel and insurance.
Other Key Performance Indicators
EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow
EBITDA represents net income (loss) before interest expense, provision (benefit) for income taxes, depreciation and amortization. EBITDA Margin represents EBITDA as a percentage of net sales for each period.
Adjusted EBITDA represents EBITDA before stock-based compensation expense, loss on extinguishment of debt, CFO transition costs, natural disaster costs, costs recognized on step-up of Accu-Fab acquired inventory, acquisition related costs and restructuring and impairment costs. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of net sales for each period.
Free Cash Flow represents net cash provided by (used in) operating activities less cash flow used in the purchase of property, plant and equipment.
These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP. These measures should not be considered as an alternative to net income (loss) or any other performance measure derived in accordance with GAAP as an indicator of our operating performance. We present EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow as management uses these measures as key performance indicators, and we believe they are measures frequently used by securities analysts, investors and other parties to evaluate companies in our industry. These measures have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP.
Our calculation of EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow may not be comparable to the similarly named measures reported by other companies. Potential differences between our measures of EBITDA and Adjusted EBITDA compared to other similar companies’ measures of EBITDA and Adjusted EBITDA may include differences in capital structure and tax positions.
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The following table presents a reconciliation of net income (loss) and comprehensive income (loss), the most directly comparable measure calculated in accordance with GAAP, to EBITDA and Adjusted EBITDA, and the calculation of EBITDA Margin and Adjusted EBITDA Margin for each of the periods presented.
| | | | | | | | | | | | | | | | |
| | Three Months Ended | | | Nine Months Ended | | ||||||||||
| | September 30, | | | September 30, | | ||||||||||
| | 2026 | | | 2025 | | | 2026 | | | 2025 | | ||||
Net income (loss) and comprehensive income (loss) | | $ | 424 | | | $ | (2,675) | | | $ | (9,846) | | | $ | (3,752) | |
Interest expense |
| | 2,956 |
| | | 3,430 |
|
| | 10,093 |
| | | 6,395 |
|
Provision (benefit) for income taxes |
| | 958 |
| | | (707) |
|
| | (3,342) |
| | | (941) |
|
Depreciation and amortization |
| | 11,244 |
| | | 11,136 |
|
| | 33,428 |
| | | 30,222 |
|
EBITDA |
| | 15,582 |
| | | 11,184 |
|
| | 30,333 |
| | | 31,924 |
|
Stock-based compensation expense (1) |
| | 1,461 |
| | | 845 |
|
| | 3,763 |
| | | 2,953 |
|
Loss on extinguishment of debt (2) | | | — | | | | — | | | | 134 | | | | — | |
CFO transition costs (3) | | | — | | | | — | | | | — | | | | 1,148 | |
Natural disaster costs (4) | | | (310) | | | | 15 | | | | (310) | | | | 307 | |
Acquisition related costs (5) |
| | 225 |
| | | 887 |
|
| | 225 |
| | | 3,265 |
|
Restructuring and impairment (6) | | | — | | | | 559 | | | | 2,460 | | | | 559 | |
Costs recognized on step-up of Accu-Fab acquired inventory (7) | | | — | | | | 591 | | | | — | | | | 591 | |
Adjusted EBITDA | | $ | 16,958 | | | $ | 14,081 | | | $ | 36,605 | | | $ | 40,747 | |
Net sales | | $ | 170,358 | | | $ | 144,310 | | | $ | 478,119 | | | $ | 412,217 | |
EBITDA Margin | |
| 9.1 | % | |
| 7.7 | % | |
| 6.3 | % | |
| 7.7 | % |
Adjusted EBITDA Margin | |
| 10.0 | % | |
| 9.8 | % | |
| 7.7 | % | |
| 9.9 | % |
| (1) | Non-cash employee compensation based on the value of common stock issued pursuant to the 2019 Omnibus Incentive Plan. |
| (2) | Unamortized debt issuance costs written off as part of the execution of the Third Amendment, attributable to lenders that decreased their capacity in the Credit Agreement. |
| (3) | Costs associated with the separation of the former CFO. |
| (4) | Costs incurred for facility clean-up following tornado damage at one of the Company’s locations and insurance proceeds to recover those costs. |
| (5) | Transaction costs, primarily legal and professional services, related to acquisitions. |
| (6) | Restructuring and impairment costs related to the consolidation of four warehouses into the Company’s existing facilities. |
| (7) | Expense associated with the recognized fair value step-up of inventory in correlation with the Accu-Fab acquisition. |
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The following table presents a reconciliation of net cash provided by (used in) operating activities, the most directly comparable measure calculated in accordance with GAAP, to Free Cash Flow for each of the periods presented.
| | | | | |
| Nine Months Ended | ||||
| September 30, | ||||
| 2026 | | 2025 | ||
Net cash provided by (used in) operating activities | $ | 3,005 | | $ | 25,181 |
Less: Capital expenditures | | 19,942 | | | 8,430 |
Free cash flow | $ | (16,937) | | $ | 16,751 |
Free Cash Flow Analysis Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
Free Cash Flow for the nine months ended September 30, 2026 was ($16,937) as compared to $16,751 for the nine months ended September 30, 2025, a decrease of $33,688 or 201.1%. Please see the “Liquidity and Capital Resources” section below for further information.
Consolidated Results of Operations
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | | | | | |
| |||||||||
| | 2026 | | | 2025 | | | Increase (Decrease) |
| |||||||||
| | | | % of Net | | | | | % of Net | | | Amount | | |
| |||
| | Amount | | Sales | | | Amount | | Sales | | | Change | | % Change | | |||
Net sales | | $ | 170,358 | | 100.0 | % | | $ | 144,310 | | 100.0 | % | | $ | 26,048 | | 18.1 | % |
Cost of sales | | | 151,595 | | 89.0 | % | | | 128,371 | | 89.0 | % | | | 23,224 | | 18.1 | % |
Manufacturing margin | | | 18,763 | | 11.0 | % | | | 15,939 | | 11.0 | % | | | 2,824 | | 17.7 | % |
Amortization of intangible assets |
| | 3,130 |
| 1.8 | % | | | 3,125 |
| 2.2 | % | | | 5 |
| 0.2 | % |
Bonuses and deferred compensation | | | 2,461 |
| 1.4 | % | | | 2,221 |
| 1.5 | % | | | 240 |
| 10.8 | % |
Other selling, general and administrative expenses |
| | 8,834 |
| 5.2 | % | | | 10,545 |
| 7.3 | % | | | (1,711) |
| (16.2) | % |
Income from operations |
| | 4,338 |
| 2.5 | % | | | 48 |
| 0.0 | % | | | 4,290 |
| 8,937.5 | % |
Interest expense |
| | (2,956) |
| (1.7) | % | | | (3,430) |
| (2.4) | % | | | (474) |
| (13.8) | % |
Provision (benefit) for income taxes |
| | 958 |
| 0.6 | % | | | (707) |
| (0.5) | % | | | 1,665 |
| 235.5 | % |
Net income (loss) and comprehensive income (loss) | | $ | 424 |
| 0.2 | % | | $ | (2,675) |
| (1.9) | % | | $ | 3,099 |
| 115.9 | % |
EBITDA | | $ | 15,582 |
| 9.1 | % | | $ | 11,184 |
| 7.7 | % | | $ | 4,398 |
| 39.3 | % |
Adjusted EBITDA | | $ | 16,958 |
| 10.0 | % | | $ | 14,081 |
| 9.8 | % | | $ | 2,877 |
| 20.4 | % |
Net Sales. Net sales were $170,358 for the three months ended September 30, 2026 as compared to $144,310 for the three months ended September 30, 2025, an increase of $26,048, or 18.1%. This increase was driven by growth in the Datacenter & Critical Power, Commercial Vehicle, and Construction & Access end markets.
Manufacturing Margins. Manufacturing margins were $18,763 for the three months ended September 30, 2026 as compared to $15,939 for the three months ended September 30, 2025, an increase of $2,824, or 17.7%. The increase was primarily driven by improved capacity utilization due to higher sales volumes. Manufacturing margin percentages were 11.0% for the three months ended September 30, 2026, as compared to 11.0% for the three months ended September 30, 2025, a change of 0 basis points.
Amortization of Intangible Assets. Amortization of intangible assets was $3,130 for the three months ended September 30, 2026, as compared to $3,125 for the three months ended September 30, 2025, an increase of $5 or 0.2%.
Bonuses and Deferred Compensation Expenses. Bonuses and deferred compensation expenses were $2,461 for the three months ended September 30, 2026 as compared to $2,221 for the three months ended September 30, 2025, an increase of $240, or 10.8%. The increase was driven by higher bonus accruals aligning with Company financial targets.
Other Selling, General and Administrative Expenses. Other SG&A expenses were $8,834 for the three months ended September 30, 2026 as compared to $10,545 for the three months ended September 30, 2025, a decrease of $1,711, or 16.2%. The
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decrease was primarily attributable to lower non-recurring acquisition-related expenses and the realization of synergies associated with the Accu-Fab acquisition.
Interest Expense. Interest expense was $2,956 for the three months ended September 30, 2026 as compared to $3,430 for the three months ended September 30, 2025, a decrease of $474, or 13.8%. The decrease was due to lower average borrowings partially offset by higher interest rates in the current period.
Provision (Benefit) for Income Taxes. Income tax expense (benefit) was $958 for the three months ended September 30, 2026 as compared to ($707) for the three months ended September 30, 2025. The increase in the expense of $1,665 is primarily due to a greater pre-tax income in the current year period compared to the pre-tax loss in the prior year period. Refer to Note 7 – Income Taxes of the Condensed Consolidated Financial Statements for further details.
Due to the factors described in the preceding paragraphs, net income (loss) and comprehensive income (loss), Adjusted EBITDA, Adjusted EBITDA Margin and EBITDA Margin, and EBITDA increased during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025.
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
| | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, | | | | | | |
| |||||||||
| | 2026 | | | 2025 | | | Increase (Decrease) |
| |||||||||
| | | | % of Net | | | | | % of Net | | | Amount | | |
| |||
| | Amount | | Sales | | | Amount | | Sales | | | Change | | % Change | | |||
Net sales | | $ | 478,119 | | 100.0 | % | | $ | 412,217 | | 100.0 | % | | $ | 65,902 | | 16.0 | % |
Cost of sales | | | 430,702 | | 90.1 | % | | | 367,126 | | 89.1 | % | | | 63,576 | | 17.3 | % |
Manufacturing Margin | | | 47,417 | | 9.9 | % | | | 45,091 | | 10.9 | % | | | 2,326 | | 5.2 | % |
Amortization of intangible assets |
| | 9,400 |
| 2.0 | % | | | 6,591 |
| 1.6 | % | | | 2,809 |
| 42.6 | % |
Bonuses and deferred compensation |
| | 12,111 |
| 2.5 | % | | | 7,071 |
| 1.7 | % | | | 5,040 |
| 71.3 | % |
Other selling, general and administrative expenses |
| | 27,323 |
| 5.7 | % | | | 29,727 |
| 7.2 | % | | | (2,404) |
| (8.1) | % |
Impairment of long-lived assets | | | 1,544 | | 0.3 | % | | | — | | — | % | | | 1,544 |
| NM | |
Income from operations |
| | (2,961) |
| (0.6) | % | | | 1,702 |
| 0.4 | % | | | (4,663) |
| (274.0) | % |
Interest expense |
| | (10,093) |
| (2.1) | % | | | (6,395) |
| (1.6) | % | | | 3,698 |
| 57.8 | % |
Loss on extinguishment of debt | | | (134) | | (0.0) | % | | | — |
| — | % | | | (134) | | NM | |
Provision (benefit) for income taxes |
| | (3,342) |
| (0.7) | % | | | (941) |
| (0.2) | % | | | (2,401) |
| (255.2) | % |
Net income (loss) and comprehensive income (loss) | | $ | (9,846) |
| (2.1) | % | | $ | (3,752) |
| (0.9) | % | | $ | (6,094) |
| (162.4) | % |
EBITDA | | $ | 30,333 |
| 6.3 | % | | $ | 31,924 |
| 7.7 | % | | $ | (1,591) |
| (5.0) | % |
Adjusted EBITDA | | $ | 36,605 |
| 7.7 | % | | $ | 40,747 |
| 9.9 | % | | $ | (4,142) |
| (10.2) | % |
Net Sales. Net sales were $478,119 for the nine months ended September 30, 2026 as compared to $412,217 for the nine months ended September 30, 2025, an increase of $65,902, or 16.0%. This increase was driven by organic growth in the Datacenter & Critical Power, Commercial Vehicle and Construction & Access end markets and the impact of the Accu-Fab acquisition completed in the third quarter of 2025. These increases were partially offset by lower demand in the Powersports, Agriculture, and Military end markets.
Manufacturing Margins. Manufacturing margins were $47,417 for the nine months ended September 30, 2026 as compared to $45,091 for the nine months ended September 30, 2025, an increase of $2,326, or 5.2%. Manufacturing margin percentages were 9.9% for the nine months ended September 30, 2026, as compared to 10.9% for the nine months ended September 30, 2025, a decrease of 100 basis points. The decrease in manufacturing margin percentage was primarily driven by restructuring costs, project launch and outsourcing costs related to the Datacenter & Critical Power end market and lower capacity utilization due to softer demand within the Powersports, Agriculture and Military end markets, partially offset by higher margin sales contribution from the Accu-Fab acquisition.
Amortization of Intangible Assets. Amortization of intangible assets was $9,400 for the nine months ended September 30, 2026, as compared to $6,591 for the nine months ended September 30, 2025, an increase of $2,809 or 42.6%. The increase was due to amortization expense associated with identifiable intangible assets from the Accu-Fab acquisition.
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Bonuses and Deferred Compensation Expenses. Bonuses and deferred compensation expenses were $12,111 for the nine months ended September 30, 2026 as compared to $7,071 for the nine months ended September 30, 2025, an increase of $5,040, or 71.3%. The increase was driven by a one-time cash bonus in connection with the successful completion of the acquisition of Accu-Fab and higher bonus accruals aligning with Company financial targets.
Other Selling, General and Administrative Expenses. Other SG&A expenses were $27,323 for the nine months ended September 30, 2026 as compared to $29,727 for the nine months ended September 30, 2025, a decrease of $2,404, or 8.1%. The decrease was primarily attributable to non-recurring executive transition expenses and Accu-Fab acquisition-related costs in the prior year.
Impairment of Long-Lived Assets. During the nine months ended September 30, 2026, as part of the Company’s restructuring activities designed to reduce fixed costs and optimize its operational footprint, in January 2026, the Company fully exited four warehouses. As the assets were no longer in use, an impairment was recorded for the entirety of the ROU asset balance for the three leased assets. The fourth asset was an owned building in Fond du Lac, Wisconsin, for which the Company recorded a partial impairment expense of $375.
Interest Expense. Interest expense was $10,093 for the nine months ended September 30, 2026 as compared to $6,395 for the nine months ended September 30, 2025, an increase of $3,698, or 57.8%. The increase was due to higher average borrowings and interest rates under the Company’s revolving credit facility.
Provision (Benefit) for Income Taxes. Income tax expense (benefit) was ($3,342) for the nine months ended September 30, 2026 as compared to ($941) for the nine months ended September 30, 2025. The increase in benefit of $2,401 is primarily due to greater pre-tax loss in the current year period compared to the pre-tax loss in the prior year period. Refer to Note 7 – Income Taxes of the Condensed Consolidated Financial Statements for further details.
Due to the factors described in the preceding paragraphs, net income (loss) and comprehensive income (loss), EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin decreased during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025.
Liquidity and Capital Resources
Cash Flows Analysis
| | | | | | | | | | | | | |
| | Nine Months Ended | | | | | |||||||
| | September 30, | | Increase (Decrease) | | | |||||||
| | 2026 | | 2025 | | $ Change | | % Change | | | |||
Net cash provided by (used in) operating activities | | $ | 3,005 | | $ | 25,181 | | | (22,176) | | (88.1) | % | |
Net cash used in investing activities |
| | (19,936) |
| | (148,470) |
| | (128,534) | | (86.6) | % |
|
Net cash provided by (used in) financing activities |
| | 16,938 |
| | 124,300 |
| | (107,362) | | (86.4) | % |
|
Net change in cash | | $ | 7 | | $ | 1,011 | | $ | (1,004) | | | | |
Operating Activities. Cash provided by operating activities was $3,005 for the nine months ended September 30, 2026, as compared to $25,181 for the nine months ended September 30, 2025. The decrease of $22,176 was primarily due to a higher use of cash driven by an increase in inventory and accounts receivable supporting higher sales volumes. This was partially offset by an increase in cash provided by accounts payable.
Investing Activities. Cash used in investing activities was $19,936 for the nine months ended September 30, 2026, as compared to $148,470 for the nine months ended September 30, 2025. The $128,534 decrease in cash used in investing activities was driven by the acquisition of Accu-Fab in 2025, partially offset by increased capital investments needed to support the Datacenter & Critical Power end market.
Financing Activities. Cash provided by financing activities was $16,938 for the nine months ended September 30, 2026, as compared to $124,300 for the nine months ended September 30, 2025. The decrease of $107,362 in cash provided by financing activities was primarily driven by payments on the Company’s revolving credit facility that exceeded borrowings during the period, partially offset by proceeds received from the Company’s stock offering.
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Amended and Restated Credit Agreement
On June 28, 2023, we entered into an amended and restated credit agreement (the Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, as administrative agent (the Agent).
On June 26, 2025, we entered into the First Amendment which increased the amount of total allowable borrowings under the revolving credit facility from $250,000 to $350,000, by exercising the previously available $100,000 accordion feature. All other material terms of the Credit Agreement, including applicable interest rates, remained unchanged.
On February 25, 2026, we entered into the Third Amendment to the Credit Agreement (Third Amendment) which lowered the amount of total allowable borrowings under the revolving credit facility from $350,000 to $275,000 and reduced our minimum consolidated interest coverage ratio to 2.75 to 1.00, during the Covenant Adjustment Period. The Third Amendment also increased our maximum consolidated leverage ratio up to a maximum 5.25 to 1.00 during the Covenant Adjustment Period. Following the Covenant Adjustment Period, the Company is required to maintain a minimum consolidated interest coverage ratio of 3.00 to 1.00 and a maximum consolidated leverage ratio of 3.50 to 1.00. As a result of these financial covenant changes, the interest pricing grid was updated to include additional interest rate tiers. All other material terms of the Credit Agreement remained unchanged. All amounts borrowed under the Credit Agreement (as amended by the amendments) mature on June 28, 2028. During the three months ended September 30, 2026, we exited the Covenant Adjustment Period.
Borrowings under the Credit Agreement bear interest at a fluctuating SOFR plus an applicable margin based on the current consolidated total leverage ratio (which may be adjusted for certain reserve requirements), plus 1.25% to 2.75% depending on the current Consolidated Total Leverage Ratio (as defined in the Credit Agreement). Under certain circumstances, we may not be able to pay interest based on SOFR. If that happens, we will be required to pay interest at the Base Rate, which is the sum of the higher of (i) the Prime Rate (as publicly announced by the Agent from time to time), (ii) the Federal Funds Rate plus 0.50% and (iii) Adjusted Term SOFR for a one-month tenor in effect on such day plus 1.00%.
At September 30, 2026, the interest rate on outstanding borrowings under the revolving credit facility was 6.40%. After accounting for our debt covenants, we had availability of $30,344 under the revolving credit facility at September 30, 2026.
We must pay a commitment fee of 0.20% to 0.35% per annum on the average daily unused portion of the aggregate unused revolving commitments under the Credit Agreement. At September 30, 2026, this fee was 0.30%. We must also pay fees as specified in the Fee Letter (as defined in the Credit Agreement) and with respect to any letters of credit issued under the Credit Agreement.
The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on our ability to, subject to certain exceptions, create, incur or assume indebtedness; create, incur, assume or suffer to exist liens; make certain investments; allow our subsidiaries to merge or consolidate with another entity; make certain asset dispositions; pay certain dividends or other distributions to shareholders; enter into transactions with affiliates; enter into sale leaseback transactions; and exceed the limits on annual capital expenditures. The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum consolidated interest coverage ratio of 3.00 to 1.00, as well as a consolidated total leverage ratio not to exceed 3.50 to 1.00. As of September 30, 2026, under the terms of the Credit Agreement, our interest coverage ratio was 3.40 to 1.00 and our consolidated total leverage ratio was 2.90 to 1.00.
The Credit Agreement includes customary events of default, including, among other things, payment default, covenant default, breach of representation or warranty, bankruptcy, cross-default, material ERISA events, material money judgment, and failure to maintain subsidiary guarantees. If an event of default occurs, the Agent will be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the credit facility, and all other actions permitted to be taken by a secured creditor.
Other Debt
Additionally, the Company has a Fond du Lac County and Fond du Lac Economic Development Corporation term note (Fond du Lac Term Note). The Fond du Lac Term Note is secured by a security agreement, payable in annual installments of $500 plus interest at 2.00% and is due in full in December 2028. The balance outstanding as of September 30, 2026 and December 31, 2025 was
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$1,375. As of September 30, 2026, the short-term and long-term balances were $500 and $875, respectively. These balances are recorded in other current liabilities and other long-term liabilities in the Condensed Consolidated Balance Sheets.
Capital Requirements and Sources of Liquidity
During the nine months ended September 30, 2026 and 2025, our capital expenditures were $19,942 and $8,430, respectively. The increase of $11,512 was driven by an increase in capital investments needed to support rapidly accelerating demand in the Datacenter & Critical Power end market. Capital expenditures for the full year 2026 are expected to be between $25,000 and $35,000.
We have historically relied upon cash available through credit facilities, in addition to cash from operations, to finance our working capital requirements and to support our growth. We regularly monitor potential capital sources, including equity and debt financings, in an effort to meet our planned capital expenditures and liquidity requirements. Our future success will be highly dependent on our ability to access outside sources of capital. We will continue to have access to the availability currently provided under the Credit Agreement as long as we remain compliant with the financial covenants. Based on our estimates at this time, we expect to be in compliance with these financial covenants through 2026 and the foreseeable future.
We believe that our operating cash flow and available borrowings under the Credit Agreement are sufficient to fund our operations for 2026 and beyond. However, future cash flows are subject to a number of variables, and additional capital expenditures will be required to conduct our operations. There can be no assurance that operations and other capital resources will provide cash in sufficient amounts to maintain planned or future levels of capital expenditures. In the event we make one or more acquisitions and the amount of capital required is greater than the amount we have available for acquisitions at that time, we could be required to reduce the expected level of capital expenditures and/or seek additional capital. If we seek additional capital, we may do so through borrowings under the Credit Agreement, joint ventures, asset sales, offerings of debt or equity securities or other means. We cannot guarantee that this additional capital will be available on acceptable terms or at all. If we are unable to obtain the funds we need, we may not be able to complete acquisitions that may be favorable to us or finance the capital expenditures necessary to conduct our operations.
Contractual Obligations
The following table presents our obligations and commitments to make future payments under contracts and contingent commitments at September 30, 2026:
| | | | | | | | | | | | | | | | |
| | | | | Payments Due by Period | | ||||||||||
| | Total | | 2026 | | 2027 – 2028 | | 2029 – 2030 | | Thereafter | | |||||
Long-term debt principal payment obligations (1) | | $ | 131,549 | | $ | 500 | | $ | 131,049 | | $ | — | | $ | — | |
Forecasted interest on debt payment obligations (2) | | | 11,689 | | | 2,287 | | | 9,402 | | | — | | | — | |
Finance lease obligations (3) |
| | 18,477 |
| | 1,146 |
| | 8,463 |
| | 7,479 |
| | 1,389 |
|
Operating lease obligations (3) |
| | 29,676 |
| | 1,957 |
| | 14,263 |
| | 9,066 |
| | 4,390 |
|
Total | | $ | 191,391 | | $ | 5,890 | | $ | 163,177 | | $ | 16,545 | | $ | 5,779 | |
| (1) | Principal payments under the Company’s Credit Agreement, which expires in June 2028 and the Fond du Lac Term Note, which is due in December 2028. |
| (2) | Forecasted interest on debt obligations is based on the debt balance, interest rate and unused fee of the Company’s revolving credit facility and debt balance and interest rate of the Company’s Fond du Lac Term Note. |
| (3) | See Note 4 – Leases in the Notes to Condensed Consolidated Financial Statements for additional information. |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk from changes in customer forecasts, interest rates, and to a lesser extent, commodities. To reduce such risks, we selectively use financial instruments and other proactive management techniques.
Customer Forecasts
The use and consumption of our components, products and services fluctuates depending on order forecasts we receive from our customers. These order forecasts can change dramatically from quarter-to-quarter dependent upon the respective markets that our customers provide products in.
Interest Rate Risk
We are exposed to interest rate risk on certain of our short- and long-term debt obligations used to finance our operations and acquisitions. We have SOFR-based floating rate borrowings under the Credit Agreement, which exposes us to variability in interest payments due to changes in the referenced interest rates.
The amount borrowed under the revolving credit facility under the Credit Agreement was $130,174 with an interest rate of 6.40% as of September 30, 2026. Please see “Liquidity and Capital Resources – Amended and Restated Credit Agreement” in Part I, Item 2 and Note 3 in the Notes to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for more specifics.
A hypothetical 100-basis-point increase in interest rates would have resulted in an additional $1,324 of interest expense based on our variable rate debt at September 30, 2026. We do not use derivative financial instruments to manage interest risk or to speculate on future changes in interest rates. A rise in interest rates could negatively affect our cash flow.
Commodity Risk
We source a wide variety of materials and components from a network of suppliers. Commodity raw materials, such as steel, aluminum, copper, paint and paint chemicals, and other production costs are subject to price fluctuations, which could have a negative impact on our results. We strive to pass along such commodity price increases to customers to avoid profit margin erosion and in many cases utilize contracts with those customers to mitigate the impact of commodity raw material price fluctuations. As of September 30, 2026, we did not have any commodity hedging instruments in place.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow for timely decisions regarding required disclosure. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives.
As of September 30, 2026, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2026. Management believes the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with GAAP.
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Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended September 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently a party to any material litigation proceedings. From time to time, however, we may be a party to litigation and subject to claims incident to the ordinary course of business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 4, 2026.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The table below sets forth information with respect to purchases we made of shares of our common stock during the quarter ended September 30, 2026:
| | | | | | | | | | |
| | | | | | | Total Number | | Dollar Value of | |
| | | | | | | of Shares | | Shares that | |
| | Total | | | | | Purchased as | | May Yet Be | |
| | Number | | | | | Part of Publicly | | Purchased | |
| | of Shares | | Average Price | | Announced Plans | | Under the Plans | ||
Period | | Purchased | | Paid per Share | | or Programs (1) | | or Programs (1) | ||
July 2026 | | — | | $ | — | | — | | $ | 14,497,519 |
August 2026 | | — | | $ | — | | — | | $ | 14,497,519 |
September 2026 | | — | | $ | — | | — | | $ | 14,497,519 |
Total |
| — |
| | |
| — |
| | |
| (1) | On October 26, 2023, the Board of Directors approved a new share repurchase program of up to $25 million of shares through 2026. The current share repurchase program replaced the prior program. |
Item 5. Other Information
During the three months ended September 30, 2026, the following directors and officers (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted a “Rule 10b5-1 trading arrangement,” as defined in Item 408(a) of Regulation S-K:
Effective
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Item 6. Exhibits.
The exhibits listed in the Exhibit Index below are filed as part of this Quarterly Report on Form 10-Q.
EXHIBIT INDEX
| | |
Exhibit Number | | Description |
| | |
31.1 | | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
31.2 | | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
32 | | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | |
101.INS | | Inline XBRL Instance Document |
| ||
101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
| ||
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| ||
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| ||
101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document |
| ||
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| ||
104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
MAYVILLE ENGINEERING COMPANY, INC. | |||
Date: November 4, 2026 |
| By: | /s/ Jagadeesh A. Reddy |
| Jagadeesh A. Reddy | ||
| President, Chief Executive Officer and Director | ||
| By: | /s/ Rachele M. Lehr | |
| | Rachele M. Lehr | |
| | Chief Financial Officer | |
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