0001104659-26-056257
SEC filingNet sales grew 6.8% driven by acquisition and datacenter demand, but manufacturing margin fell 28.5% due to restructuring and lower utilization, resulting in a net loss.
For Q1 2026, Mayville Engineering Company reported net sales of $144.8 million, up 6.8% from $135.6 million in Q1 2025, driven by the Accu-Fab acquisition and organic growth in Datacenter & Critical Power, Construction & Access, and Powersports end markets, partially offset by lower demand in Commercial Vehicle and Military. Manufacturing margin fell 28.5% to $11.0 million (7.6% of sales) from $15.3 million (11.3%), due to non-recurring restructuring costs, project launch costs for datacenter, and lower capacity utilization. Net loss was $8.2 million compared to net income of $20 thousand in the prior year. Adjusted EBITDA declined 46.8% to $6.5 million from $12.2 million, with margin dropping from 9.0% to 4.5%.
Although the company operates as a single segment, it serves multiple end markets. Growth was led by Datacenter & Critical Power, Construction & Access, and Powersports, while Commercial Vehicle and Military saw softer demand. The acquisition of Accu-Fab contributed to higher sales and intangible amortization. Restructuring efforts, including consolidation of warehouses, resulted in impairment charges of $1.5 million and additional costs within manufacturing margin.
Management expects capital expenditures of $15 million to $20 million for full-year 2026, primarily to support accelerating demand in the Datacenter & Critical Power market. The company is focused on completing its restructuring plan to reduce fixed costs and optimize its operational footprint. Liquidity remains adequate with $42.2 million available under the revolving credit facility as of March 31, 2026, and the company expects to remain in compliance with financial covenants through 2026.
As of March 31, 2026, the Company held $2.1M in cash and cash equivalents, up from $1.5M at year-end 2025. Total debt consisted of $212.4M drawn on the bank revolving credit facility and a $1.4M term note (Fond du Lac), for a combined $213.8M. The revolving facility was amended in February 2026 (Third Amendment), reducing the borrowing limit from $350M to $275M and adjusting financial covenants: the consolidated leverage ratio maximum was set at 5.25x for Q1/Q2 2026, stepping down to 3.50x by 2027. At quarter-end, the actual leverage ratio was 4.40x, within the covenant. The interest coverage ratio was 4.27x, above the 2.75x minimum. Shareholders' equity was $232.2M, down from $240.7M at December 31, 2025, primarily due to the $8.2M net loss.
The Notes disclose no material purchase commitments or contractual obligations beyond the debt and lease liabilities already recorded on the balance sheet. The Company has a restructuring plan (initiated August 2025, expanded in Q1 2026) with expected aggregate charges of $5M to $7M, of which $1.7M in asset write-downs and $1.7M in equipment relocation costs have been incurred to date. The Company also has operating lease obligations of $30.6M (current + non-current) and finance lease obligations of $0.8M (current portion). No other off-balance-sheet commitments were noted.
No share repurchases occurred during Q1 2026; the Company held 2,187,334 treasury shares at cost of $20.0M, unchanged from year-end. No dividends were paid or declared. Capital expenditures totaled $4.2M (2.9% of sales), up from $3.0M in the prior-year quarter. Debt activity was significant: the Company borrowed $480.7M and repaid $470.9M under the revolver, resulting in a net increase of $9.9M. Financing costs of $0.4M were incurred in connection with the Third Amendment, and a $0.1M loss on extinguishment of debt was recognized.
The Company operates as a single operating segment and is managed on a consolidated basis. All sales are generated and all assets are located within the United States. The Notes provide disaggregated revenue by product category and end market. By product category, Fabrication contributed $81.5M (56.3% of net sales), Performance Structures $44.5M (30.7%), Tube $16.1M (11.1%), Tank $6.7M (4.6%), and Outdoor Sports $1.6M (1.1%). By end market, Commercial Vehicle was the largest at $38.8M (26.8%), followed by Datacenter & Critical Power at $23.6M (16.3%), Powersports at $23.3M (16.1%), Construction & Access at $20.1M (13.9%), Agriculture at $10.3M (7.1%), Military at $5.8M (4.0%), and Other at $22.8M (15.8%). The Datacenter & Critical Power category was added following the Accu-Fab acquisition, with $4.1M of prior-period revenue reclassified from Other.
Operating cash flow (CFO) turned negative at $(2.8) million for the three months ended March 31, 2026, a significant decline from $8.3 million in the prior-year period. This was driven by a net loss of $(8.2) million versus near-breakeven net income of $20 thousand in Q1 2025, and large working capital outflows: accounts receivable increased by $10.6 million, inventories by $6.7 million, and tooling in progress by $0.6 million. These were partially offset by a $10.2 million increase in accounts payable and a $4.2 million rise in accrued liabilities. Non-cash add-backs included $7.8 million of depreciation, $3.1 million of amortization, and a $1.5 million impairment of long-lived assets.
Capital expenditures (capex) rose to $4.2 million from $3.0 million, reflecting increased investment. Free cash flow (CFO minus capex) was negative $(6.9) million, compared to positive $5.4 million a year ago. No dividends were paid, and share repurchases were nil (versus $1.7 million in Q1 2025). Financing activities provided $7.5 million, primarily from net bank revolving credit borrowings of $9.9 million, offset by $0.8 million in finance lease payments and $0.4 million in financing costs. The company ended the period with $2.1 million in cash, up from $1.5 million at year-end 2025.