Mayville Engineering Company, Inc. 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 tooling fabrication aluminum extrusion coating assembly and aftermarket components. The company serves diverse end markets such as heavy and medium duty commercial vehicles construction and access equipment powersports data center and critical power…
Mayville Engineering Company, Inc. 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 tooling fabrication aluminum extrusion coating assembly and aftermarket components. The company serves diverse end markets such as heavy and medium duty commercial vehicles construction and access equipment powersports data center and critical power agriculture military and other industrial sectors.
The company generates revenue by selling its manufactured components and providing engineering design prototyping tooling and assembly services to original equipment manufacturer customers. Its primary products include metal fabrications stampings aluminum extrusions tube bends welded assemblies and coated parts which are sold to OEMs in the vehicle construction powersports agriculture data center and defense markets.
Mayville Engineering Company, Inc. holds a leading position in the fragmented contract manufacturing market due to its scale broad process capabilities and long standing relationships with blue chip OEMs. The firm has been recognized as the largest fabricator in the United States by The Fabricator magazine for fifteen consecutive years from 2011 to 2025. Competitive advantages include its ability to offer a one stop solution across multiple manufacturing processes its flexibility to shift production across end markets and its contractual structures that pass through raw material price changes to protect margins.
The company serves a diverse customer base of original equipment manufacturers with notable accounts including PACCAR Inc. and John Deere which together represented approximately 23.6 percent of net sales in 2025. Its top twenty customers accounted for $421 million of sales in the same year and no single end market contributed more than one third of total revenue.
Sector:IndustrialsSector rationaleThe company is a contract manufacturer that sells metal fabrications, stampings, aluminum extrusions, and welded assemblies to OEM customers in the commercial vehicle, construction, and agriculture sectors. These activities fall directly under 'Metal Fabrication' and 'Industrial Machinery' within the Industrials sector, as the company provides capital goods and operating services to other businesses.Industries:Metal FabricationIndustrialsPrimaryMayville Engineering Company specializes in transforming metal into engineered products, specifically selling metal fabrications, stampings, aluminum extrusions, tube bends, and welded assemblies. These products are sold to OEM customers in the vehicle, construction, and agriculture markets.DefenseIndustrialsSecondaryThe company explicitly serves the military and defense markets, providing manufactured components and fabrication services to these sectors.Classified using BQ-MICSCIK: 0001766368
Investment Thesis
▲ Bull case
The data center and critical power end market is undergoing a secular shift as OEMs increasingly outsource fabrication to specialized partners like Mayville Engineering Company. Management noted that the company’s penetration among the top ten potential customers remains in the low single digits, indicating a large untapped addressable market. The qualified opportunity pipeline exceeds $125 million with $50 to $60 million of projects slated to launch in 2026, which implies a multi year runway of high margin revenue that is not fully reflected in current consensus estimates. As these customers scale their programs, the intent is to establish long term strategic metal fabrication partnerships, providing visibility beyond discrete project wins. This outsourcing trend mirrors historical patterns seen in legacy end markets such as agriculture and construction where OEMs exited fab operations to suppliers like Mayville. Consequently the market may be underestimating the durability and scalability of the data center revenue stream.
The Hazel Park facility presents a significant capacity upside that has not been fully priced into the stock. Historically viewed as a $100 million capacity plant the company has already placed approximately $55 million of data center work into Hazel Park and retains another $15 to $20 million of legacy work. This leaves roughly $25 to $30 million of additional data center capacity that can be brought online without new construction or major footprint changes. Utilization improvements at Hazel Park would directly lift fixed cost absorption and drive margin expansion as the plant moves toward full run rate production. The company has expressed confidence that Hazel Park can be filled within the next year or so implying a near term catalyst for operating leverage that is not yet reflected in guidance. Investors may be overlooking this internal capacity expansion as a source of incremental EBITDA.
Cross selling synergies from the AccuFab acquisition are outperforming initial expectations providing an immediate and accretive earnings boost. Management disclosed that pre acquisition cross selling was in the single digits whereas current expectations for 2026 are $50 to $60 million of incremental revenue from data center and critical power customers. This represents a substantial increase in high margin sales that directly benefits the bottom line while leveraging existing manufacturing infrastructure. The AccuFab business also brings higher margin product lines that improve the overall mix helping to offset pressures in legacy markets. Because these synergies are driven by repeatable OEM relationships they are likely to persist and grow as data center demand continues to rise. The market may not be fully crediting this acquisition derived upside in its valuation multiples.
Legacy end markets are showing signs of stabilization that could support a cyclical rebound in the second half of the year. The agriculture segment moved from an expected mid teens decline to flat due to strength in the small ag turf care division which offsets weakness in large ag. Construction and access remained flat but nonresidential demand partially fueled by data center buildout remains solid. Commercial vehicle OEMs are beginning pre buy activity ahead of the 2027 EPA emissions standards a development that could lift production rates in the second half. Powersports while currently soft is supported by short cycle aluminum projects that provide near term revenue. These improvements suggest that the drag from legacy markets may be less severe and more transitory than feared allowing the company to benefit from a mixed but improving demand backdrop.
The recent equity offering provides a clear path to deleveraging while preserving financial flexibility for growth investments. Net proceeds of approximately $100 million are earmarked for repayment of the senior secured revolving credit facility which currently carries a balance linked to the AccuFab acquisition. Reducing debt will lower the leverage ratio from the current 4.4x toward the long term target of 2.5x decreasing interest expense and improving free cash flow conversion. The company has a proven track record of paying down debt after acquisitions typically within a 12 to 18 month window. As deleveraging progresses the balance sheet will regain optionality to fund organic capacity expansions or strategic initiatives without overleveraging. This proactive capital management reduces a key risk that investors might be overemphasizing.
The data center and critical power end market is undergoing a secular shift as OEMs increasingly outsource fabrication to specialized partners like Mayville Engineering Company. Management noted that the company’s penetration among the top ten potential customers remains in the low single digits, indicating a large untapped addressable market. The qualified opportunity pipeline exceeds $125 million with $50 to $60 million of projects slated to launch in 2026, which implies a multi year runway of high margin revenue that is not fully reflected in current consensus estimates. As these customers scale their programs, the intent is to establish long term strategic metal fabrication partnerships, providing visibility beyond discrete project wins. This outsourcing trend mirrors historical patterns seen in legacy end markets such as agriculture and construction where OEMs exited fab operations to suppliers like Mayville. Consequently the market may be underestimating the durability and scalability of the data center revenue stream.
The Hazel Park facility presents a significant capacity upside that has not been fully priced into the stock. Historically viewed as a $100 million capacity plant the company has already placed approximately $55 million of data center work into Hazel Park and retains another $15 to $20 million of legacy work. This leaves roughly $25 to $30 million of additional data center capacity that can be brought online without new construction or major footprint changes. Utilization improvements at Hazel Park would directly lift fixed cost absorption and drive margin expansion as the plant moves toward full run rate production. The company has expressed confidence that Hazel Park can be filled within the next year or so implying a near term catalyst for operating leverage that is not yet reflected in guidance. Investors may be overlooking this internal capacity expansion as a source of incremental EBITDA.
Cross selling synergies from the AccuFab acquisition are outperforming initial expectations providing an immediate and accretive earnings boost. Management disclosed that pre acquisition cross selling was in the single digits whereas current expectations for 2026 are $50 to $60 million of incremental revenue from data center and critical power customers. This represents a substantial increase in high margin sales that directly benefits the bottom line while leveraging existing manufacturing infrastructure. The AccuFab business also brings higher margin product lines that improve the overall mix helping to offset pressures in legacy markets. Because these synergies are driven by repeatable OEM relationships they are likely to persist and grow as data center demand continues to rise. The market may not be fully crediting this acquisition derived upside in its valuation multiples.
Legacy end markets are showing signs of stabilization that could support a cyclical rebound in the second half of the year. The agriculture segment moved from an expected mid teens decline to flat due to strength in the small ag turf care division which offsets weakness in large ag. Construction and access remained flat but nonresidential demand partially fueled by data center buildout remains solid. Commercial vehicle OEMs are beginning pre buy activity ahead of the 2027 EPA emissions standards a development that could lift production rates in the second half. Powersports while currently soft is supported by short cycle aluminum projects that provide near term revenue. These improvements suggest that the drag from legacy markets may be less severe and more transitory than feared allowing the company to benefit from a mixed but improving demand backdrop.
The recent equity offering provides a clear path to deleveraging while preserving financial flexibility for growth investments. Net proceeds of approximately $100 million are earmarked for repayment of the senior secured revolving credit facility which currently carries a balance linked to the AccuFab acquisition. Reducing debt will lower the leverage ratio from the current 4.4x toward the long term target of 2.5x decreasing interest expense and improving free cash flow conversion. The company has a proven track record of paying down debt after acquisitions typically within a 12 to 18 month window. As deleveraging progresses the balance sheet will regain optionality to fund organic capacity expansions or strategic initiatives without overleveraging. This proactive capital management reduces a key risk that investors might be overemphasizing.
The company’s leverage remains elevated and its ability to deleverage hinges on an uncertain recovery in legacy end markets. Net debt stood at $219 million at the end of the first quarter giving a covenant leverage ratio of 4.4x well above the long term target of 2.5x. Interest expense was $3.7 million for the quarter a significant increase from the prior year driven by borrowings for the AccuFab acquisition. Management’s deleveraging plan relies on strong second half sales from data center and critical power plus a rebound in commercial vehicle markets both of which are contingent on external factors such as OEM pre buy timing and EPA regulation impacts. If data center ramp delays or legacy market weakness persist the company may struggle to meet covenant requirements potentially forcing restrictive actions or additional financing at unfavorable terms.
Margins remain under pressure due to ongoing launch costs and softer legacy volumes casting doubt on the speed of a margin rebound. Manufacturing margin was 7% for the quarter compared with 11.3% in the prior year period while adjusted EBITDA margin fell to 4.5% from 9%. The $1.2 million of project launch costs directly reduced profitability and management acknowledged that these costs are expected to continue into the second quarter before easing. Legacy end markets continue to experience softness with commercial vehicle production down approximately 24% year over year and only modest improvements seen in construction and access. Without a clear and sustained uplift in higher margin data center sales the overall margin profile may remain depressed for longer than anticipated limiting earnings upside.
Legacy end markets show limited signs of a broad based recovery creating dependence on a narrow set of growth drivers. Commercial vehicle OEM production remains near cyclical lows and while ACT has raised its 2026 forecast current OEM activity levels have not yet indicated a meaningful rebound. The powersports segment is experiencing headwinds from ongoing outsourcing to Asia and the access segment failed to accelerate as anticipated. Agriculture’s flat outlook stems from offsetting strengths in a niche turf care segment rather than a broad resurgence. This patchwork performance means that the company cannot rely on a widespread legacy market turnaround to support revenue growth increasing the pressure on data center and critical power to deliver outsized results.
Capacity constraints may necessitate additional capital investments that have not been fully quantified introducing execution risk. Management indicated that without further investments the existing footprint could support approximately $850 million of revenue beyond which the company would likely run out of capacity given the differing mix of data center and legacy products. Expanding to serve data center customers may require new footprint on the Eastern Seaboard or significant capital expenditure to adapt existing plants for larger heavier components. The returns on such investments are uncertain and any misstep could lead to overcapacity or suboptimal asset utilization. Investors may be assuming that current capacity plans are sufficient while the reality could require additional spending that impacts free cash flow and leverage.
Customer concentration in the fast growing data center segment creates vulnerability to order fluctuations. The first quarter’s $50 million of new project awards were driven largely by two brand new customers to Mayville Engineering Company and AccuFab highlighting a reliance on a limited number of large OEMs. While management expects these relationships to grow the data center industry is characterized by rapid shifts in supplier preference and project timing. A delay or reduction in orders from either of these key customers could materially affect the quarterly revenue run rate and impair the company’s ability to meet its growth targets. This concentration risk is not fully reflected in the current valuation which assumes a diversified and steady inflow of data center business.
The company’s leverage remains elevated and its ability to deleverage hinges on an uncertain recovery in legacy end markets. Net debt stood at $219 million at the end of the first quarter giving a covenant leverage ratio of 4.4x well above the long term target of 2.5x. Interest expense was $3.7 million for the quarter a significant increase from the prior year driven by borrowings for the AccuFab acquisition. Management’s deleveraging plan relies on strong second half sales from data center and critical power plus a rebound in commercial vehicle markets both of which are contingent on external factors such as OEM pre buy timing and EPA regulation impacts. If data center ramp delays or legacy market weakness persist the company may struggle to meet covenant requirements potentially forcing restrictive actions or additional financing at unfavorable terms.
Margins remain under pressure due to ongoing launch costs and softer legacy volumes casting doubt on the speed of a margin rebound. Manufacturing margin was 7% for the quarter compared with 11.3% in the prior year period while adjusted EBITDA margin fell to 4.5% from 9%. The $1.2 million of project launch costs directly reduced profitability and management acknowledged that these costs are expected to continue into the second quarter before easing. Legacy end markets continue to experience softness with commercial vehicle production down approximately 24% year over year and only modest improvements seen in construction and access. Without a clear and sustained uplift in higher margin data center sales the overall margin profile may remain depressed for longer than anticipated limiting earnings upside.
Legacy end markets show limited signs of a broad based recovery creating dependence on a narrow set of growth drivers. Commercial vehicle OEM production remains near cyclical lows and while ACT has raised its 2026 forecast current OEM activity levels have not yet indicated a meaningful rebound. The powersports segment is experiencing headwinds from ongoing outsourcing to Asia and the access segment failed to accelerate as anticipated. Agriculture’s flat outlook stems from offsetting strengths in a niche turf care segment rather than a broad resurgence. This patchwork performance means that the company cannot rely on a widespread legacy market turnaround to support revenue growth increasing the pressure on data center and critical power to deliver outsized results.
Capacity constraints may necessitate additional capital investments that have not been fully quantified introducing execution risk. Management indicated that without further investments the existing footprint could support approximately $850 million of revenue beyond which the company would likely run out of capacity given the differing mix of data center and legacy products. Expanding to serve data center customers may require new footprint on the Eastern Seaboard or significant capital expenditure to adapt existing plants for larger heavier components. The returns on such investments are uncertain and any misstep could lead to overcapacity or suboptimal asset utilization. Investors may be assuming that current capacity plans are sufficient while the reality could require additional spending that impacts free cash flow and leverage.
Customer concentration in the fast growing data center segment creates vulnerability to order fluctuations. The first quarter’s $50 million of new project awards were driven largely by two brand new customers to Mayville Engineering Company and AccuFab highlighting a reliance on a limited number of large OEMs. While management expects these relationships to grow the data center industry is characterized by rapid shifts in supplier preference and project timing. A delay or reduction in orders from either of these key customers could materially affect the quarterly revenue run rate and impair the company’s ability to meet its growth targets. This concentration risk is not fully reflected in the current valuation which assumes a diversified and steady inflow of data center business.