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Hello, everyone. Thank you for joining us today for the Mayville Engineering Company, Inc. fourth quarter and full year 2025 results conference call. My name is Sami, and I will be coordinating your call today. During the presentation, you can register a question by pressing star to remove yourself from the question queue. Your host, Stefan Neely with Valem Advisors, to begin. Please go ahead, Stefan.

Thank you, operator. On behalf of our entire team, I would like to welcome you to our fourth quarter and full year 2025 results conference call. Leading the call today is Mayville Engineering Company, Inc.’s President and CEO, Jagadeesh Reddy, and Rachele Lehr, Chief Financial Officer. Today’s discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today’s forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements.

Further, this call will include the discussion of certain non-GAAP financial measures.

Reconciliation of these measures to the closest GAAP financial measure is included in our quarterly earnings press release, which is available at mechinc.com. Following our prepared remarks, we will open the line for questions. With that, I would like to turn the call over to Jagadeesh.

Thank you, Stefan, and good morning, everyone. The fourth quarter represented a transitional period for Mayville Engineering Company, Inc. While demand in our legacy end markets remained muted during what is typically a seasonally softer quarter, our team remained focused on positioning the business for successful execution and growth as we enter 2026. Over the past six months, we have experienced robust and sustained demand momentum within our data center and critical power end market. In response, we have proactively reallocated available capacity and resources to support successful project launches and meet the evolving needs of our OEM customers in this market. As a result of these actions, our fourth quarter margin performance was pressured. We incurred and retained cost that would typically be flexed with softer demand, reflecting deliberate investments to support program readiness and execution. Importantly, this margin pressure is primarily driven by early-stage project inefficiencies and project launch costs as we prepare for higher-volume programs rather than pricing or structural cost challenges. As these programs ramp and utilization improves, we expect margins to normalize in line with our long-term expectations. These margin dynamics are transitory in nature and, importantly, position Mayville Engineering Company, Inc. to deliver profitable growth in 2026 and beyond as we capture demand in the rapidly expanding data center and critical power market. In addition, we remain focused on executing our MBX operational excellence framework, driving disciplined process improvements across our plants, and advancing initiatives to optimize and rationalize our manufacturing footprint, which we expect will further enhance operating leverage as end market demand recovers. Now turning to a review of our key markets and the respective end market outlooks. Starting with commercial vehicle, we continue to see net sales to this end market declining approximately 19% versus the prior-year period. In their most recent report, ACT has revised its full-year 2026 outlook upwards, now projecting a 3.4% increase in Class 8 production in 2026. This improved outlook reflects greater clarity surrounding the 2027 EPA emission standards, resulting in anticipated pre-buy activity and improved macroeconomic conditions. In contrast, our construction and access market revenues increased approximately 15% year over year during the quarter. This is supported by the AccuFab acquisition and strong nonresidential activity. Organic net sales growth in this market was approximately 11% in the quarter. In the powersports market, net sales grew approximately 20% year over year, driven by the impact of incremental volumes from new business wins and stabilized customer production schedules, as dealer inventory levels are now in line with current demand. This was partially offset by a decrease in sales within the marine propulsion market. Net sales in our agriculture market were approximately flat year over year amid signs that demand is reaching a cyclical trough. Within our data center and critical power end market, our business saw growth of approximately 13% year over year, supported by legacy OEM demand growth and early project launches on AccuFab-related cross-selling opportunities. Overall, demand from OEM customers in the data center and critical power market remains strong. Our qualified opportunity pipeline now exceeds $125 million, and the value of projects scheduled to launch in 2026 is approximately $40 million to $50 million. Combined with organic growth from our legacy OEM customers, we expect data center and critical power to represent more than 20% of our revenues in 2026. Looking ahead, we expect this end market to remain a consistent growth opportunity for Mayville Engineering Company, Inc. Based on recent market studies, we estimate our serviceable addressable market to range from $115 million to $185 million per gigawatt of new data center capacity installed. Given the number of new data centers expected to come online in the U.S. in 2026, this represents a total market opportunity of approximately $3.2 billion. We expect this market to grow at a compound annual rate of approximately 16% from 2026 to 2030. Please note these estimations exclude server racking opportunities, which represent additional incremental upside. While we will continue to take a balanced approach to allocating capacity to this end market, the robust demand growth allows us to proactively manage our commitments. This approach ensures us to maximize footprint utilization, deliver consistent profitable growth through the cycle, and continue to invest in growth initiatives that unlock long-term value. Before turning the call over to Rachele, I want to highlight several areas of commercial momentum that give us confidence in our growth trajectory for 2026 and beyond. Across all of our end markets, customer engagement and bidding activity remains strong. During the fourth quarter, we secured approximately $15 million in new project awards with data center and critical power customers. Year to date, total awards across our legacy markets were more than $108 million, exceeding our annual target of $100 million. Looking ahead to 2026, we expect total bookings across our end markets to be approximately $140 million, supporting profitable growth as our legacy markets move toward a cyclical recovery exiting 2026. Within our legacy end markets, we have continued to expand our share with our commercial vehicle customers as they launch new products heading into the 2027 EPA regulation changes. These products support future growth and are scheduled to begin production in late 2026 and 2027. In addition to the future expansion in commercial vehicle revenues, we secured new agriculture business on new model introductions and additional service business for a military customer. Within the data center and critical power market, approximately $15 million of awards secured in the fourth quarter were primarily driven by demand from major AccuFab customers. These substantial scopes of work span power distribution units, static transfer switches, busway components, and data center cooling. Turning to capital allocation. We closed 2025 with strong free cash flow generation. While we expect free cash flow to be softer in the first quarter, we continue to anticipate full-year free cash flow conversion of approximately 50% to 60% of adjusted EBITDA. As we progress through the year, our primary use of free cash flow will remain focused on debt reduction. As we progress toward our long-term target of 2.5 times leverage, we expect to become increasingly opportunistic deploying capital towards M&A, with an emphasis on further diversifying our end market exposure and supporting consistent profitable growth. In the meantime, our priority remains disciplined capital deployment, ensuring that growth investments are targeted, return-driven, and fully aligned with maintaining balance sheet strength. With respect to guidance, to provide investors with greater visibility into our business trends, we are introducing quarterly financial guidance in addition to our full-year outlook. This is due to the fast-moving data center and critical power environment and developing improvements within our legacy end markets. Rachele will cover our guidance in more detail, but I would like to highlight a few key elements of our expectations for 2026. Inclusive of a full year of AccuFab and associated data center and critical power cross-selling synergies we expect to realize in 2026, we anticipate full-year net sales to increase relative to 2025, along with margin expansion and improved free cash flow. These expectations assume an improvement of our legacy end markets primarily during the second half of the year. In summary, Mayville Engineering Company, Inc. is entering an important transitional year, one that is shaping the next phase of our growth and value creation. While we are intentionally investing both capital and operating resources ahead of anticipated demand, we believe the foundation for sustainable growth and improved profitability is firmly in place. With disciplined execution and a clear strategic focus, we are well positioned to deliver long-term value for our shareholders and our customers. With that, I would like to turn the call over to Rachele. Thank you, Jag.

Good morning, everyone. Total sales for the fourth quarter increased 10.7% on a year-over-year basis to $134.3 million. Excluding the impact of the AccuFab acquisition, organic net sales declined by 5.3% compared to the prior-year period. Our manufacturing margin rate was 6.6% for the fourth quarter of 2025, compared to 8.9% for the prior-year period. The decrease in our manufacturing margin rate was due to $1.2 million of data center and critical power-related project launch costs and $1.7 million of early-stage project inefficiencies on a commercial vehicle project. This was partially offset by higher-margin net sales contribution from the AccuFab acquisition. Excluding these temporary launch phase dynamics, our manufacturing margin rate would have been approximately 9% during the quarter. Other selling, general, and administrative expenses were $9.7 million, or 7.2% of net sales, for the fourth quarter of 2025 as compared to $7.9 million, or 6.5% of net sales, for the same prior-year period. The increase in these expenses primarily reflects $200,000 in nonrecurring costs and $1.1 million in incremental SG&A expense, each associated with the AccuFab acquisition. Interest expense was $3.8 million for the fourth quarter of 2025, as compared to $2.0 million in the prior-year period. The increase was driven by higher borrowings resulting from the AccuFab acquisition, partially offset by lower SOFR base rates relative to the prior-year period. Adjusted EBITDA margin was 4.7% for the quarter, compared to 7.6% in the prior-year period. The decrease reflects lower legacy market volumes and $2.9 million of project launch costs and early-stage project inefficiencies, partially offset by the benefit of the AccuFab acquisition. Excluding these items, adjusted EBITDA margin would have been approximately 7%. Turning now to our cash flow and the balance sheet. Free cash flow during the fourth quarter of 2025 was $10.2 million, as compared to $35.6 million in the prior-year period. The year-over-year decline primarily reflects the receipt of $25.5 million in settlement proceeds in the fourth quarter of last year related to a former fitness customer dispute. Excluding this item, free cash flow was approximately flat year over year. During the fourth quarter, we used available free cash flow to repay approximately $10.0 million in debt, resulting in net debt at the end of the quarter of $205.3 million, up from $82.1 million at the end of 2024. Our increased debt resulted in a net leverage ratio of 3.7 times as of December 31. Now turning to a review of our 2026 financial guidance. As Jag previously mentioned, we are introducing quarterly guidance in addition to full-year guidance. For the first quarter of 2026, we currently expect net sales of between $137 million and $143 million and adjusted EBITDA of between $5 million and $7 million. Our first-quarter outlook reflects continued project launch costs and margin pressure ahead of the majority of data center and critical power project ramps, which begin in the second quarter. Additionally, free cash flow is expected to reflect normal seasonal working capital usage, incremental working capital investments to support the data center and critical power ramp-up, and planned capital expenditures of $3 million to $5 million. For the full year, we expect net sales of between $580 million and $620 million, adjusted EBITDA of between $50 million and $60 million, and free cash flow of between $25 million and $35 million. This outlook reflects a full year of AccuFab ownership, $40 million to $50 million of incremental cross-selling revenue, and a gradual improvement in the legacy end market demand, primarily in the second half of the year. Additionally, embedded within our 2026 adjusted EBITDA guidance is $2 million to $3 million of cost improvements driven by our NBX operational excellence and strategic value-based pricing initiatives, net of inflationary pressures. As it relates to free cash flow, we expect our free cash flow conversion for the full year to be between approximately 50% to 60% of adjusted EBITDA, coupled with full-year capital expenditures to be between $15 million and $20 million. Given this outlook and our priority of repaying our debt, we expect to achieve a net leverage ratio of three times or lower by the end of 2026. Again, 2026 will be a transitional year for us. We believe that our cost structure and working capital discipline will position us for profitable growth, strong free cash flow yield, and improved adjusted EBITDA margins as we enter a phase of cyclical recovery and growth across our legacy end markets, supported by elevated growth in our data center and critical power end market. With that, operator, that concludes our prepared remarks. We will now open for questions as we begin our question-and-answer session.

Thank you, Linda.

Our next question comes from Greg Palm from Craig-Hallum. Your line is open. Please go ahead.

Yeah. Thanks. Good morning, everybody. You know, you incurred more cost and recognized lower margins than expected back from the November call. So I guess, looking back, what surprised you relative to that outlook? And then maybe you can just help unpack the EBITDA guide specifically for Q1 and maybe more specifically, what that margin progression looks like in sort of the Q2 to Q4 time period. It sounded like there are going to be some costs that you incur in Q2, and those mostly trail off in the second half. So just wanted to be sure we understood that right.

Yeah. Let me start first, Greg. The headline really for us is we have won more business in data centers than we anticipated coming out of our November call. We expect our Q1—we are not obviously talking about Q1 bookings here—but our Q1 bookings for data centers will be significantly higher than what we have seen in the second half of last year after the acquisition. So in preparation for those, we are in the middle of many of those launches already. The business we have won in Q1. So we had to bring on significant resources online, not only in December, also in Q1 as we sit here. And that is the primary reason why we are showing the margin profile that we are showing in Q1.

And I would add, you know, our legacy business, we always had product launches, but we are doing that over, you know, 12 to 18 months, a much longer time, and we are able to do that. This, you know, this business is 8 to 12 weeks. And so we have had to expedite that and really make investments. We have a product launch team specific to this, more than we have ever had before, because of the speed and the intensity of which our customers are asking for things. Again, as Jag mentioned, this really did exceed our expectations and what we are winning. We first acquired this business, you know, we have said, hey, it is going to be $1 to $2 million in cross-selling synergies in 2026, and here we now are at $40 to $50 million. So we have just had to invest more, and we are seeing that continue into Q1 because a lot of these will not be at their full run rate until the end of the year, but we want to nail it and want to make sure we hit it out of the park with these new customers in our locations.

And we are retooling six of our legacy plants—Mayville Engineering Company, Inc. plants. That is a significant effort to put data center work, not only what we have won so far year to date and last year, but what we are anticipating in 2026. Right? So it is great news, obviously, for the rest of the year and long term, that we are able to quickly convert six of our facilities for cross-selling synergies.

Okay. That is great color. And you already mentioned you are expecting that end market to represent more than 20% of revenue. I am just curious, as we sit here today, what kind of visibility do you have into that, you know, call it a $125 million revenue number if you want to use that. And, you know, there is a sentence in the press release that talks about pipeline and multiple large opportunities. Are these multiple large opportunities within that $125 million number, or is that something separate?

So I would say with very good confidence that we have good line of sight to that $120 million worth of data center business for the year. So that is number one. Number two, very little of significantly large opportunities are in that qualified pipeline number we put out.

Sorry. Say that one more time.

So some of the significant and large opportunities that we are pursuing, those are either—it is, you know, one or zero, right? So we did not want to take into account those opportunities—we do not want to inflate our pipeline with those large opportunities. Right? So when we talk about the $125 million of qualified pipeline, most of that is visibility and greater than 50% confidence that we could win those opportunities. So we are excluding some significantly large opportunities in that qualified pipeline.

Okay. And just to be clear, like, is there—when you talk about expectations for the year, if you were to, you know, win more small business or win, you know, one or a few of these large— is that something that could translate into more revenue this year above and beyond that $120 million number, or should we think of that more like a 2027 event?

Yeah. It is possible, Greg, and hence our effort at quarterly guidance here. This is a fast-moving end market, and we do know, though we laid out $40 to $50 million cross-selling synergies, our expectation is that if we continue to win at the existing win rates in this end market, right, there could be upside to that number.

Okay. Perfect. Alright. I will leave it there. Thanks.

Thank you.

Our next question comes from Ross Sparenblek from William Blair. Your line is open. Please go ahead.

Good morning. This is Sam Carlevon for Ross. Thanks for taking my question.

Hey. Morning, Sam.

Maybe starting with Rachele, can you help us parse out some of the moving pieces within the EBITDA guidance? I mean, how should we build to just an $8 million year-over-year step up considering 2026 includes a full year of AccuFab and incremental $40 million to $50 million of margin-accretive cross selling.

Sure. I think there are a couple of things to take into account here. One is our legacy business. The volumes continue to remain muted as we budgeted today. Now, of course, we just talked a little bit about what we learned on CV overnight—that there is some upside there. But as we look through the year, our customers are saying, our guidance is saying, that we expect most of those to start to rebound sometime in the second half of the year. So we have that pressure continuing on that piece of our business. We have a high fixed cost—55% of our costs are fixed—and so when we have that lower utilization, we really have ongoing under-absorption associated with that. The other piece is preparing for that legacy rebound. We are carrying some talent that we continue to hold on to because it is coming. And then the third piece is those launch costs. We, like I said, really want to make sure we hit it out of the park. The speed is faster. We are ramping up talent. We are learning as we go with this, and it is exciting to see the growth that we have with that, but we really need to be focused on delivering that. So first half is really pressured by the absorption, the launch cost, and getting ready for the rebound.

Got it. Have you given kind of what those launch costs are expected to be for the full year? Or just any sort of range there would be helpful.

Not full year, but we expect the first quarter to be very similar to the fourth quarter of launch costs for data center and critical power—$1 million to $1.5 million. We expect that to taper down through each of the quarters of the year.

Okay. Got it. I guess switching gears then. I mean, the $40 million to $50 million of in-year revenue synergies sounds like that is back-half loaded. I mean, it seems like that implies a pretty healthy exit rate exiting 2026. So I do not know if you could kind of help us size that ramp and kind of what that means as we enter 2027 of the business you guys have already won?

Yeah. I think, you know, as we look at—and we are seeing—by 2026, data center and critical power could be 20% of our total business, so that is significant. The adjusted EBITDA margins on that business are between 20% to 22%. So when you take that into account, knowing that the majority of that $40 to $50 million is going to come in the second half of the year, we will be exiting with margins in excess of our historical. If our historical business continues to come up, that will only additionally be upside.

Okay. From a revenue perspective, though, if we say, call it, you know, $20 million in the third quarter, $20 million in the fourth quarter, something like that, that implies an exit rate of, like, call it $80 million. Is that the right way we should be thinking about it into 2027?

Yeah. That is, I think, a pretty good assumption, Sam.

Okay. Got it. That is what I thought. That is helpful. I will leave it there. Thanks, guys.

Thank you. Our next question comes from Andrew Kaplowitz from Citi. Your line is open. Please go ahead.

Alright. Good morning. This is Natalia on behalf of Andrew Kaplowitz.

Morning, Natalia.

Maybe just first question on data centers. As data centers and critical power segment grows and represents more than 20% of revenue, should investors expect more customer concentration to increase as well? Or is the opportunity pipeline diversified across multiple customers within that end market?

Yeah. Within that end market, it is reasonably diversified. You know, not only are we working with some of the blue-chip names in the critical power end market, we also are working with the next tier of OEMs within that end market. So I do not expect a significant concentration in that end market for us.

Got it. That is helpful. And then just maybe switching over to your access end market and then the recovery as well. You are expecting a modest recovery driven by infrastructure spending and potential rate cuts. But are you already seeing early signs of improvement in customer order patterns or conversations, or is that recovery more of a second-half expectation at this point in time?

In the construction portion of that end market, we are already seeing the build rates increasing. You have seen public comments from our customers that are bringing back capacity online, bringing back employees online. Right? So we are seeing that already hitting our demand and EDI rates. In access, there were some, you know, starts and stops, if you will, with particularly the rental houses increasing their demand in Q4, but then, you know, some softer commentary from our customers on the access side of the end market. So we will have to wait and see and watch how access develops. But, you know, in general, we are positive on the construction and access end market.

Great. Thank you. Appreciate it. That is it on my end.

Yep. Thank you.

Our next question comes from Ted Jackson from Northland Securities. Your line is open. Please go ahead.

Thanks. I came in with 10 questions to ask and checked every one of them off. So, anyway, here is a couple for you, Jag. With regards to the 20% of revenue for ’26 that could be coming from data center and power, will that—are you going to be turning down in your legacy business to be able to ramp and hit that, or is that just on top of what is going on within the footprint that you have? For a lot of your legacy businesses, you know, then going even a little further, it is like, if we do see a stronger turnaround in, say, commercial vehicles, which, you know, my personal opinion is that we will, you know, will that preclude you from being able to get any additional business? And then I have got a couple more.

Yeah. At this stage, Ted, we believe we have enough capacity to be able to ramp up data center business while we see improved run rates within our legacy business. It is not a question for 2026, I believe. It is really for us to figure out a way to continue to expand our capacity as we go into 2027. Our teams have been working feverishly for the last couple of quarters using our MBX framework to increase throughput, increase productivity. We are bringing on additional shifts in some of our plants. We are hiring more employees in some of our locations. So we are planning accordingly. And at this point, we are not going to have to turn down any of our legacy customer business. But that is something that we will continue to watch. And it also presents us some choices as we go into 2027, not necessarily for capacity reasons, but perhaps for margin and pricing reasons. Right? So we will continue to evaluate those opportunities as we go into 2027.

I think the adding shifts is interesting to me. I mean, and, obviously, employees too. You know, I recall in the past, some of your locations, you only were running at one shift. And, honestly, adding additional shifts was kind of difficult because of labor constraints. You know, where are you in terms of, you know, kind of current utilization? You know, where are you in terms of kind of adding production shifts, and what are some of the hurdles you are having to overcome to make that happen?

Yeah. Without the two AccuFab facilities, right—if you exclude them for a second—I would say we are still around 55% on a 24/7 equipment capacity basis. Right? So as we ramp up some of these volumes in our legacy factories, we are looking at automation. We are looking at, you know, extending our shift schedules. Not all, but many of our plants coming out of COVID went to two 10-hour shifts for four days a week. Right? So that is 20 hours a day, four days. But what we are doing is standardizing our shift schedules across the company. Now we are going to three eight-hour shifts, five days a week. That is one way we can immediately increase our run capacity in these plants. We are looking at automation, as I mentioned. We are looking at weekend shifts. We are looking at third shifts in some of our plants. So, you know, it is a mix of different strategies depending on where we see capacity needed and where we see demand coming in.

Okay. Going over to when you talk about, you know, having to put resources to ramp up and incurring margins—so we are kind of dancing around all this—so it is people, you know, more labor cost. Is there—what other things go into, you know, the resources needed to position yourself to capture this growth that is impacting margins beyond, you know, obviously, the order of additional—

Right. You know, as we mentioned earlier, our traditional program launches would have taken 6 to 18 months in many cases. Now we are having to launch these new programs on a 6 to 12 week basis. I will give an example. We have one data center customer that in January came to us and then essentially quadrupled their demand for one of the product lines we used to make in Raleigh. So we had to shift that product line to Defiance, Ohio, one of our, you know, traditionally commercial truck plants, and we went in full force. You know, I was part of a 15-member Kaizen team. I was on the plant floor for a full week figuring out how do we, you know, quadruple our output in that plant for that customer. So, you know, we are rethinking how we assemble components. We are rethinking how we do product flow through the factories. We are rethinking logistics. Right? We are having to rethink everything from scratch compared to what we used to do in any of our previous operations. Right? So that needs project management resources. That needs engineering resources. That needs MBX resources. So all of this, we are trying to do at six different locations, as I just mentioned, as we ramp up data center work. Right? So that is the initial investment we are making. We are obviously having to put in some additional capital to improve productivity. We have most of the capital needed to produce these parts, but sometimes additional capital—new types of machines or automation—improves throughput and product. We are also thinking about how do we get more volume out of our factories as well for these customers. So those are all the things that we are doing. And all of that is investment we are making upfront.

Okay. And then my last question, which is kind of a silly one, but just to make sure—I want to make sure I understand what the term revenue synergies mean. So when you say that, you know, you are going to have $40 to $50 million in the revenue synergies in 2026, can you just give me a quick definition of what that—

Yeah.

Anything from a data center customer that is going to be made in a legacy Mayville Engineering Company, Inc. plant. That is how we define that. As we mentioned, you know, last year, the two AccuFab plants we acquired were at capacity when we acquired them. So we are, of course, trying to drive additional throughput through those two plants, and that is not considered in the cross-selling synergies. That is just productivity improvement at those two plants. But anything we are moving out, increasing volume, and, you know, new programs from data center customers that we are putting into Mayville Engineering Company, Inc. plants, you know, that is where we consider cross-selling synergies.

Thought I had it right. Just wanted to make sure. That is it for me. Thanks a lot, Jag.

Thank you, Ted.

We currently have no further questions, so I would like to hand back to Jag for some closing remarks.

Before we conclude, I want to again thank our employees for their continued strong focus and execution, and our shareholders for their ongoing support. While we recognize the near-term challenges in several of our legacy markets, we are confident in the progress we are making to position Mayville Engineering Company, Inc. for durable, higher-margin growth in the years ahead. We look forward to sharing our continued progress with you. Thank you for joining us today.