Mayville Engineering Company (MEC) Q3 2026 earnings summary

Executive summary

• Q3 net sales rose 18.1% YoY to $170.4M; adjusted EBITDA increased to $17.0M, or 10.0% of sales, as DCP, Commercial Vehicle and Construction & Access growth outweighed softness in legacy markets.

• Q3 net income was $0.4M versus a $2.7M loss; nine-month net loss widened to $9.8M, adjusted EBITDA declined to $36.6M, and operating cash flow fell to $3.0M.

• Management expects sequential margin improvement through 2027 as ramp costs moderate, utilization improves and footprint rebalancing advances; fuller benefits are expected late 2027 or early 2028.

Financial highlights

• Q3 manufacturing margin was $18.8M, or 11.0% of sales, versus $15.9M and 11.0% a year earlier; $3.0M of DCP launch, outsourcing and premium labor costs partly offset volume gains.

• Adjusted EBITDA was $17.0M versus $14.1M; adjusted diluted EPS was $0.15 versus $0.10, and adjusted net income was $4.0M versus $2.0M.

• SG&A was $8.8M versus $10.5M, reflecting lower non-recurring acquisition expenses and Accu-Fab synergies; interest expense was $3.0M versus $3.4M.

• Q3 free cash flow was negative $3.3M versus negative $1.1M; operating cash flow of $4.3M was offset by $7.7M of capital spending. Nine-month free cash flow was negative $16.9M.

• Nine-month manufacturing margin was $47.4M, up 5.2% YoY, while its rate fell 100 bps to 9.9%; operating loss was $3.0M versus operating income of $1.7M.

Outlook and guidance

• FY2026 guidance: net sales of $630M-$640M, adjusted EBITDA of $48M-$52M, and free cash flow of negative $16M to negative $6M; planned capex is $25M-$35M.

• Q4 adjusted EBITDA margin is expected modestly below Q3; ~$20M of DCP revenue shifted from H2 2026 into 2027, alongside seasonal softness and continuing ramp costs.

• DCP launch costs of $6M-$7M and 2H26 outsourcing costs of $2M-$3M are expected to moderate beginning in early 2027; FY2027 guidance is expected on the Q4 call.

• Preliminary 2027 outlook calls for DCP growth above 50%, Commercial Vehicle mid- to high-single-digit growth, and Construction & Access mid-single-digit growth.

• FY2027 capex is projected at $40M-$50M, focused on growth; full capacity is anticipated within 18 months as volumes ramp.