Mayville Engineering’s second quarter saw revenue and profit come in well above Wall Street’s expectations, but the market reacted negatively to ongoing cost pressures and near-term margin constraints. Management attributed the strong sales to robust demand in data center and critical power markets and a modest recovery in commercial vehicles. CEO Jagadeesh Reddy emphasized, “Our second quarter results reflect stronger-than-expected demand across several key end markets,” particularly highlighting rapid growth in data center programs and early signs of commercial vehicle market recovery. However, significant launch and outsourcing costs weighed on profitability, with management identifying these as temporary and linked to capacity expansion.
Is now the time to buy MEC? Find out in our full research report (it’s free for active Edge members).
Mayville Engineering (MEC) Q2 CY2026 Highlights:
- Revenue: $163 million vs analyst estimates of $151.1 million (23.2% year-on-year growth, 7.9% beat)
- Adjusted EPS: $0.07 vs analyst estimates of -$0.05 (significant beat)
- Adjusted EBITDA: $13.17 million vs analyst estimates of $11.4 million (8.1% margin, 15.6% beat)
- The company lifted its revenue guidance for the full year to $635 million at the midpoint from $605 million, a 5% increase
- EBITDA guidance for the full year is $56 million at the midpoint, below analyst estimates of $56.41 million
- Operating Margin: 0.2%, in line with the same quarter last year
- Market Capitalization: $583.7 million
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Mayville Engineering’s Q2 Earnings Call
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Michael Shlisky (D.A. Davidson) pressed for details on the capacity reservation model. CEO Jagadeesh Reddy explained that discussions are focused on data center customers, with potential structures involving upfront fees or volume commitments, but no contracts have been signed yet.
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Vladimir Bystricky (Citigroup) asked about the drivers behind the revenue and EBITDA guidance range. CFO Rachele Lehr cited three factors: the pace of commercial vehicle recovery, timing and execution in data center program volumes, and how quickly launch and outsourcing costs can be reduced.
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Greg Palm (Craig-Hallum) questioned how the company is prioritizing new business given limited capacity. Reddy responded that Mayville Engineering is walking away from lower-margin or smaller programs to reserve capacity for larger, higher-value opportunities, especially in data center and critical power.
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Ross Sparenblek (William Blair) inquired about the mix shift toward recurring, higher-margin revenue and the stability of the portfolio. Reddy noted that while cyclical markets like commercial vehicles remain, the company is increasing the share of data center business, aiming for this to reach up to 30% of total revenue over time.
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Edward Jackson (Northland Securities) sought clarification on the timing and nature of outsourced functions and labor costs. Management explained that outsourcing is mainly for laser cutting, brake pressing, and painting due to equipment and labor constraints, and expects these activities to return in-house as new investments are completed.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace at which Mayville Engineering brings outsourced operations in-house and reduces temporary launch costs, (2) the effectiveness of capacity expansion in meeting strong data center and critical power demand, and (3) signs of sustained recovery in commercial vehicle and construction end markets. Additionally, execution on selective capital investments and successful ramp-up of new facilities will be important markers for future growth and margin improvement.
Mayville Engineering currently trades at $22.92, down from $27.73 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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