Acquisition

9 Months Ended

Sep. 30, 2025

Acquisitions

Acquisitions

Note 2. Acquisition

On July 1, 2025, the Company acquired 100% of the membership interests of Accu-Fab, LLC (Accu-Fab). The acquisition was consummated in accordance with the terms of the Purchase Agreement dated May 23, 2025, among the Company, Accu-Fab, and Tide Rock YieldCo, LLC (the Seller). The purchase price of the acquisition was $140,500, subject to customary adjustments for the amount of cash, indebtedness, net working capital, and certain expenses of Accu-Fab as of the closing. The acquisition of Accu-Fab was structured as a stock purchase for accounting purposes. As of the closing of the acquisition, after taking into account the estimated adjustments, the Company paid the Seller a total net consideration of $141,185. The Company financed the acquisition by borrowing under its amended and restated credit agreement as described in Note 4 - Debt in the Notes to the Condensed Consolidated Financial Statements.

With locations in Wheeling, Illinois and Raleigh, North Carolina, Accu-Fab is a vertically integrated manufacturing partner providing technology driven, cutting edge metal fabrication solutions to large OEMs. Accu-Fab offers value-added services including design, engineering, sheet metal fabrication and integration, and specialized finishing. The acquisition enhances MEC’s strategic position by broadening its customer base and accelerating its entry into the rapidly growing data center & critical power infrastructure end markets.

The Company accounted for the acquisition using the acquisition method of accounting in accordance with ASC 805 - Business Combinations, with MEC being the acquiring entity. Transaction costs related to the acquisition were expensed as incurred within other selling, general, and administrative expenses and totaled $887 and $3,265 for the three and nine months ended September 30, 2025, respectively. The net sales and operating income of Accu-Fab, which is consolidated in MEC’s financial statements presented herein, since July 1, 2025 were $21,246 and $4,225, respectively, for the three months and nine months ended September 30, 2025.

The aggregate purchase price has been allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values as of the acquisition date. The estimate of the excess purchase price over the preliminary estimated fair value of net tangible assets acquired was allocated to identifiable intangible assets and goodwill. The Company engaged an independent third party to assist with the identification and valuation of the acquired assets, including intangible assets. Management makes significant estimates and assumptions when determining the fair value of assets acquired and liabilities assumed. These estimates include, but are not limited to, discount rates, projected future net sales, projected future expected cash flows, useful lives, attrition rates, and growth rates. These measures are based on significant Level 3 inputs not observable in the market.

The following table is a summary of the assets acquired, liabilities assumed, and net cash consideration paid for the acquisition of Accu-Fab. The allocation is considered preliminary and subject to finalization within one year from the acquisition date:

	Balance Sheet
	Allocation
	As of July 1,
	2025
Cash and cash equivalents	$	1,123
Accounts receivable, net		14,118
Inventory		4,594
Prepaid expenses and other current assets		256
Property, plant and equipment		9,811
Operating lease assets		3,928
Intangible assets
Customer relationships		67,000
Non-compete agreements		2,200
Other long-term assets		7
Goodwill		47,639
Total assets acquired		150,676
Accounts payable		(4,101)
Lease liabilities, current		(1,231)
Accrued liabilities:
Salaries, wages, and payroll taxes		(661)
Bonuses and deferred compensation		(305)
Other current liabilities		(275)
Lease liabilities, non-current		(2,698)
Other long-term liabilities		(220)
Total liabilities assumed		(9,491)
Total consideration	$	141,185

Inventory was valued at its estimated fair value, which is defined as expected sales price, less costs to sell, plus a reasonable margin for selling effort. The valuation resulted in an inventory fair value step-up of $591 and was fully expensed and reflected in cost of sales on the Condensed Consolidated Statement of Comprehensive Income (Loss) during the three and nine months ended September 30, 2025.

Property, plant and equipment was valued at its estimated fair value using the cost, market and sales comparison approaches. The valuation resulted in a property, plant and equipment fair value step-up of $5,326. Depreciation on property, plant and equipment is computed on a straight-line basis over the estimated useful life of the respective assets.​

The Company also recorded $67,000 of customer relationships intangible assets and $2,200 of non-compete agreement intangible assets. The purchase price allocated to these assets was based on management’s forecasted cash inflows and outflows and the multi-period excess earnings method for customer relationships and the with and without method for the non-compete agreements. Amortization expense related to these intangible assets is recorded on a straight-line basis and reflected in amortization of intangible assets on the Condensed Consolidated Statements of Comprehensive Income (Loss).

The purchase price of Accu-Fab exceeded the preliminary estimated fair value of identifiable net assets and accordingly, the difference was allocated to goodwill, all of which is tax deductible. Goodwill will be tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired, in accordance with ASC 350 – Intangibles. The goodwill recognized primarily reflects expected synergies from integrating Accu-Fab’s operations into the Company’s existing manufacturing platform, the assembled workforce, and other intangible assets that do not meet the criteria for separate recognition under ASC 805.

The Company believes that the information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed; however, the purchase price allocations are preliminary as we continue to gather the necessary information to finalize our fair value estimates and provisional amounts. Provisional amounts include items related to working capital

adjustments, intangible assets, indemnification of assets and liabilities and deferred taxes. The net working capital true-up remains subject to final agreement with the Seller and may result in future adjustments to the purchase price. During the three months ended September 30, 2025, the Company did not adjust the purchase price related to working capital adjustments.

The Company has recorded preliminary estimates for the items noted in the preceding paragraph and will record adjustments, if any, to the preliminary amounts upon finalization of the respective valuations. Such changes are not expected to be significant. The Company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.

Pro Forma Financial Information (Unaudited)

In accordance with ASC 805, the following unaudited pro forma combined results of operations have been prepared and presented to give effect to the Accu-Fab acquisition as if it had occurred on January 1, 2024, the beginning of the comparable period, applying certain assumptions and pro forma adjustments. These pro forma adjustments primarily relate to the estimated depreciation expense associated with the fair value of the acquired property, plant, and equipment, amortization of identifiable intangible assets, interest expense related to additional debt needed to fund the acquisition, and the tax impact of these adjustments. Additionally, the pro forma adjustments exclude non-recurring expenses related to transaction costs, which were expensed as incurred, and include the sale of stepped-up inventory. The unaudited pro forma consolidated results are provided for illustrative purposes only, are not indicative of the Company’s actual consolidated results of operations or consolidated financial position and do not reflect any revenue and operating synergies or cost savings that may result from the acquisition.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Net sales	$	144,310	$	150,478	$	446,191	$	506,371
Net income (loss)	$	(2,084)	$	2,110	$	1,723	$	8,848