MEC

MEC's FY2025 marks a clear inflection in the wrong direction. Revenue fell 6.0% to $546M, operating income flipped from positive to -$3.84M (-108.6%), and the company swung to a net loss of -$8.11M from +$26.0M in FY2024 — a -131.2% year-over-year collapse in profitability. Management's MD&A and Risk Factors are unusually candid about why: customer channel inventory destocking, inflationary pressure on wages/materials/logistics, and the 2025-2026 tariff regime that 'contributed to increased input costs, supply chain disruption, pricing volatility, and heightened economic uncertainty.' Critically, management explicitly states they 'expect material cost inflation and inflationary pressures on wages and benefits to continue in 2026' and 'may not be able to fully mitigate' them through pricing — i.e., the margin pressure is not behind them.

The balance sheet is the more alarming story. Total liabilities jumped 66.6% to $323M while equity shrank 4.4%, pushing liabilities/equity from ~0.8x to 1.34x in a single year. Total assets rose 26.5% — consistent with a debt-funded acquisition (MD&A references a 'recent acquisition' with intangible/PP&E fair-value work) — but the company is taking on materially more leverage at the exact moment the cycle is rolling over and earnings have gone negative. Cash on hand of just $1.50M against $74.8M of current liabilities is thin, and operating cash flow already halved to $38.6M (-57.1%). ROE of -3.4% confirms capital is currently being destroyed.