Core Viewpoint - Johnson Fistel, PLLP has initiated an investigation into the board members and executive officers of Methode Electronics, Inc. for potential breaches of fiduciary duties and violations of federal securities laws [1] Group 1: Investigation Details - The investigation is focused on allegations that Methode Electronics lost skilled employees during the COVID-19 pandemic, which impacted its transition to a new production model [2] - Issues cited include production planning deficiencies, inventory shortages, and vendor problems that hindered the company's strategic plans, particularly in the electric vehicle sector [2] - The manufacturing systems at Methode Electronics' Monterrey facility faced logistical defects, including improper system coding and quality control failures [2] - The company has fallen behind on launching new electric vehicle programs, affecting its revenue from these initiatives [2] - As a result, Methode Electronics is not on track to meet its 2023 earnings-per-share guidance or its projected organic sales growth rate [2]

Group 1 - The company is responsible for the development of transcript-related projects [1] - The company publishes thousands of quarterly earnings calls per quarter [1] - The company is continuing to grow and expand its coverage [1]

Methode Electronics Conference Summary Company Overview - Methode Electronics (NYSE: MEI) is a manufacturer of components and systems for the automotive and industrial markets [1][2] - The company reported fiscal 2025 sales of over $1 billion, primarily in North America and Europe [7] Key Messages from Earnings Call - Methode is on a transformation journey, with operational improvements leading to a $9 million increase in income from operations year-over-year [4][5] - The company has achieved three consecutive quarters of strong free cash flow and net debt reduction [5] - Despite a projected $100 million decline in sales due to lower electric vehicle (EV) demand, Methode expects to double its EBITDA for the full year [6][18] Financial Performance and Guidance - Fiscal 2026 sales are expected to range between $900 million to $1 billion, with EBITDA projected between $70 million to $80 million [18][19] - The EBITDA margin is expected to nearly double from 4.1% to 7.9% despite lower sales [20] - The company has focused on operational execution improvements, including a reduction in SG&A costs by over $9 million [48] Industry Dynamics - Methode is a leading supplier of custom engineered solutions for transportation, construction equipment, cloud computing, and automotive applications [7] - The company has a 30% compound annual growth rate in power solution sales over the last three years, driven by demand in data centers, EVs, and military applications [10][12] - The EV market is facing challenges, particularly in North America, impacting revenue projections [28][29] Strategic Initiatives - Methode is investing in its power solutions segment, anticipating future growth despite current moderation in sales [12] - The company is undergoing a transformation rather than a turnaround, focusing on stabilizing operations and improving visibility and collaboration [13][14] - There is a strategic review of the product portfolio, with a focus on core areas such as lighting, user interface, and power solutions [30] Operational Efficiencies - Methode has implemented measures to mitigate tariff impacts, including passing on costs to customers and optimizing its manufacturing footprint [25][26] - The company is actively working to improve relationships with commercial vehicle OEMs and has seen a positive response despite market challenges [40][41] Future Outlook - The data center market is expected to remain flat year-over-year, but Methode sees potential for growth as hyperscalers invest in higher voltage solutions [37][38] - The company is committed to refining its business model and aligning with market megatrends to drive future growth [18][51] Conclusion - Methode Electronics is focused on executing its transformation strategy, improving operational efficiencies, and positioning itself for future growth in key markets [21][50]

Financial Performance & Guidance - FY25 sales reached $1.05 billion[13] - Q1 Income from Operations increased by $9 million due to S&A reductions and operational improvements[8] - FY26 sales guidance midpoint is $950 million[26], compared to $1.048 billion in FY25[26] - FY26 Adjusted EBITDA guidance midpoint is $75 million[26], representing 7.9% of sales[26], compared to $43 million in FY25, which was 4.1% of sales[26] Business Segments & Geography - FY25 sales breakdown: Automotive 45%, Industrial 40%, Interface 15%[13] - FY25 sales by geography: Asia 49%, Europe & Africa 46%, North America 5%[13] Power Solutions - Power Solutions sales have grown from $116 million in FY22 to $252 million in FY25[19], driven by EV, Data Center, and Mil/Aero applications[20] - Power Solutions has experienced a sales CAGR of 30% since Fiscal 2022[20] Transformation & Strategy - The company is executing a transformation plan focused on stabilizing the base, improving operations, and leveraging synergies[21] - Key priorities for FY26 include refining the organization, executing program launches, and driving operational execution[22, 23]

Core Insights - Methode Electronics has shown significant transformation and positive developments in its latest Q1 2026 results [1] Company Overview - The company is focused on uncovering high-upside opportunities in overlooked sectors, particularly small-caps, energy, commodities, and special situations [1] - The investment strategy employed is based on the CAN SLIM framework, emphasizing fundamental momentum indicators such as EPS, ROE, and revenue [1] Analytical Approach - The analysis incorporates econometric tools like GARCH and Granger causality to assess risk, volatility, and macroeconomic influences on market cycles [1] - A multi-faceted approach is taken to build conviction across technicals, fundamentals, and catalysts, rather than relying on a single signal [1] Personal Investment Management - The management of personal capital has been ongoing since 2020, with advisory services provided under MiFID II regulations [1] - The educational background includes a bachelor's degree in Business Administration and Economics, with a master's in Finance currently being pursued [1]

Company Overview - Methode Electronics, Inc. is a leading global supplier of custom-engineered solutions with a focus on user interface, lighting, and power distribution applications [2] - The company operates sales, engineering, and manufacturing locations across North America, Europe, the Middle East, and Asia [2] Product and Market Segments - Methode designs, engineers, and produces mechatronic products for OEMs, utilizing a broad range of technologies [2] - The company's solutions are utilized in various end markets, including transportation (automotive, commercial vehicle, e-bike, aerospace, bus, and rail), cloud computing infrastructure, construction equipment, and consumer appliances [3] - The business is managed on a segment basis, with key segments being Automotive, Industrial, and Interface [3] Upcoming Events - Methode Electronics will present at the Sidoti Small Cap Virtual Conference on September 18th at 1:45 p.m. EDT, with a simultaneous webcast available on the company's website [1]

Leadership Updates - Methode Electronics, Inc. has appointed Stacie Schulz as Chief Accounting Officer, who will report to CFO Laura Kowalchik, bringing extensive experience in technical accounting and SEC reporting [1] - Randy Wilson has taken on the role of Vice President of Global Treasury & Investor Relations, combining both functions, and has 20 years of expertise in corporate treasury and investor relations [2] - Rob Cherry, the previous Vice President of Investor Relations, will be leaving the organization, with the company expressing gratitude for his contributions [3] Company Overview - Methode Electronics, Inc. is a leading global supplier of custom-engineered solutions with operations in North America, Europe, the Middle East, and Asia, focusing on mechatronic products for OEMs [4] - The company serves various end markets, including transportation, cloud computing infrastructure, construction equipment, and consumer appliances, and is managed on a segment basis: Automotive, Industrial, and Interface [5]

Financial Data and Key Metrics Changes - First quarter net sales were $240.5 million, a decrease of 7% compared to $258.5 million in fiscal 2025, and a sequential decrease of 6% [15][20] - Adjusted income from operations was $2 million, an increase of $6.7 million year-over-year, and up $23.6 million sequentially [16] - First quarter adjusted EBITDA was $15.7 million, up $5.9 million from the same period last year, and increased $22.8 million sequentially [17] - First quarter free cash flow was $18 million, compared to -$2.7 million in fiscal 2025, marking an increase of $20.7 million [18][19] - Net debt decreased by $11.7 million from the fourth quarter to $202.3 million, with a total reduction of $41 million over the last three quarters [19] Business Line Data and Key Metrics Changes - Sales in the automotive segment were weaker in North America due to the transition from legacy programs to new ones, impacting overall performance [16][25] - Data center sales grew by 12% year-over-year, although sequential sales were lower due to record sales in the previous quarter [8][15] - EV sales represented 19% of consolidated total sales, an increase from 18% last year, but down from 20% sequentially [7] Market Data and Key Metrics Changes - The automotive business in EMEA showed significant improvement year-over-year, while North America faced challenges due to program roll-offs [25] - The company remains optimistic about long-term EV trends, expecting a rebound in EV sales in fiscal 2027 despite current softness in North America [7][8] Company Strategy and Development Direction - The company is focused on launching over 30 new programs this year, with most launches scheduled for the remainder of the year [6] - Methode is leveraging its historical expertise in power solutions to drive innovation in data centers, EVs, and military applications [9][10] - The transformation journey is aimed at stabilizing the business and positioning it for future growth, with improvements in operational efficiency and working capital [11][12] Management's Comments on Operating Environment and Future Outlook - Management affirmed guidance for fiscal 2026, expecting sales in the range of $900 million to $1 billion and EBITDA between $70 million and $80 million [20][21] - The company anticipates a doubling of EBITDA margin from 4.1% to 7.9% despite a reduction in sales [21] - Management expressed confidence in the ongoing transformation efforts and the potential for future sales growth from new business opportunities [14][13] Other Important Information - The company experienced a delay in reporting first quarter earnings due to a miscalculation of dividend equivalents, which required obtaining a waiver from banks [15] - The first quarter's capital expenditures were $7.1 million, down from $13.6 million in fiscal 2025, reflecting improved efficiency in spending [18] Q&A Session Summary Question: Automotive segment contribution to EBITDA growth - Management highlighted the need to separate performance by region, noting improvements in EMEA and challenges in North America due to program transitions [25] Question: Strategic outlook for Asia - The Asia team is leading product development for EV applications, with expectations for growth despite legacy program roll-offs [29] Question: Impact of tariffs - Management confirmed no significant changes in tariff expectations, with current tariffs creating new opportunities due to USMCA compliance [39] Question: Restructuring actions progress - Management indicated ongoing consolidation efforts and headcount reductions, with a focus on structural cost reductions [40][41] Question: End market outlook for commercial vehicles - Management expects a rebound in the commercial vehicle space in 2026, with improved relationships leading to additional RFQs [42][44] Question: Sales guidance for Stellantis programs - Management confirmed no changes in the sales bridge, maintaining expectations for program impacts [52] Question: Data center bus bars market - Management clarified that the bus bars supplied are primarily for new construction, with potential for growth in this area [53][55] Question: EV sales distribution by region - In fiscal 2025, 55% of EV sales were in EMEA, 16% in Asia, and 30% in North America, indicating a diverse market exposure [58]

Financial Data and Key Metrics Changes - First quarter net sales were $240.5 million, a decrease of 7% compared to $258.5 million in fiscal 2025, and a sequential decrease of 6% [15] - Adjusted income from operations was $2 million, an increase of $6.7 million year-over-year, and up $23.6 million sequentially [16] - First quarter adjusted EBITDA was $15.7 million, up $5.9 million from the same period last year, and increased $22.8 million sequentially [17] - First quarter free cash flow was $18 million, compared to negative $2.7 million in fiscal 2025, marking an increase of $20.7 million [18] - Net debt decreased by $11.7 million from the fourth quarter to $202.3 million, with a total reduction of $41 million over the last three quarters [19] Business Line Data and Key Metrics Changes - Data center power product sales grew by 12% year-over-year, although sequential sales were lower due to record sales in the previous quarter [8] - EV sales represented 19% of consolidated total sales, an increase from 18% last year, but down from 20% sequentially [7] - The automotive segment experienced weaker sales in North America due to the transition from legacy programs to new ones [16] Market Data and Key Metrics Changes - The company remains optimistic about the long-term megatrend in EVs, expecting a significant rebound in EV sales in fiscal 2027 [8] - The performance in EMEA, particularly in Egypt, has improved significantly, while solid performance continues in Asia [6] Company Strategy and Development Direction - The company is focused on a transformation journey aimed at stabilizing the business and positioning for future growth, with significant organizational changes already implemented [11] - The power solutions segment is seen as a long-term growth engine, with ongoing investments in this area [10] - The company is leveraging its historical expertise in power distribution to capture growth opportunities in data centers, EVs, and military applications [9] Management's Comments on Operating Environment and Future Outlook - Management affirmed guidance for fiscal 2026, expecting to double EBITDA despite a projected $100 million decline in sales due to lower EV demand [5] - The company is confident in its ability to navigate various headwinds and maintain operational improvements [4] - Management highlighted the importance of customer relationships and operational efficiency in driving future growth [39] Other Important Information - The company experienced a delay in reporting first quarter earnings due to a miscalculation of dividend equivalents, which required a waiver from banks [15] - The fiscal 2026 guidance assumes a typical 52-week fiscal year, with expected sales in the range of $900 million to $1 billion [20] Q&A Session Summary Question: How does the automotive segment contribute to EBITDA growth? - Management noted that performance varies by region, with improvements in EMEA and challenges in North America due to program transitions [25] Question: What is the outlook for the Asia market? - The Asia team is leading product development for EV applications, and despite some headwinds, progress is being made [29] Question: What is the status of tariff expectations? - There has been no change in tariff expectations, and the current regime is creating new opportunities for the company [37][39] Question: How far along is the restructuring process? - The company is on track with headquarters consolidation and has reduced headcount by approximately 500 people [40][41] Question: What is the outlook for the commercial vehicle market? - Management expects a rebound in the commercial vehicle space in 2026, with ongoing interest from customers [42] Question: What is the expected growth in the EV market? - The majority of growth is anticipated to come from outside the U.S., particularly in Europe and China [60]

Financial Data and Key Metrics Changes - First quarter net sales were $240.5 million, a decrease of 7% compared to $258.5 million in fiscal 2025, and a sequential decrease of 6% [17][18] - Adjusted income from operations increased by $6.7 million year-over-year to $2 million, and increased by $23.6 million sequentially [18] - First quarter adjusted EBITDA was $15.7 million, up $5.9 million from the same period last year, and increased by $22.8 million sequentially [19] - First quarter free cash flow was $18 million, a significant increase from negative $2.7 million in fiscal 2025 [20][21] - Net debt decreased by $11.7 million from the fourth quarter to $202.3 million, with a total reduction of $41 million over the last three quarters [21] Business Line Data and Key Metrics Changes - Data center power product sales grew by 12% year-over-year, although sequential sales were lower due to record sales in the previous quarter [10][17] - Automotive segment sales were weaker in North America, impacted by the transition from legacy programs to new ones [18] - EV sales represented 19% of consolidated total sales, an increase from 18% last year, but down from 20% sequentially [9] Market Data and Key Metrics Changes - The company remains optimistic about the long-term megatrend in EVs, despite a soft near-term outlook primarily in North America [9][10] - The EMEA market, particularly Egypt, has shown notable improvement, while solid performance continues in Asia [7][12] Company Strategy and Development Direction - The company is focused on a transformation journey aimed at stabilizing the business and positioning for future growth, with significant organizational changes already implemented [13][14] - The power solutions segment is viewed as a long-term growth engine, with ongoing investments in this area [12] - The company plans to launch over 30 new programs this year, with most launches scheduled for the remainder of the year [6][7] Management's Comments on Operating Environment and Future Outlook - Management is confident in affirming guidance for fiscal 2026, expecting to double EBITDA despite a projected $100 million decline in sales due to lower EV demand [6][22] - The company anticipates a rebound in EV sales in fiscal 2027 based on customer forecasts and industry projections [10] Other Important Information - The company experienced a delay in reporting first quarter earnings due to an inadvertent miscalculation of dividend equivalents, which required obtaining a waiver from banks [17] - The fiscal 2026 guidance includes expectations for sales in the range of $900 million to $1 billion and EBITDA between $70 to $80 million [22][23] Q&A Session Summary Question: Automotive segment performance and EBITDA contribution - Management noted that the automotive business in EMEA has improved, while North America faces challenges due to program transitions, but expects stabilization and growth in fiscal 2027 [27][28] Question: Strategic outlook for Asia - The Asia team is leading product development for EV applications, and despite some headwinds, progress is being made in operational and engineering aspects [30][31] Question: Impact of tariff expectations - There has been no significant change in tariff expectations, and the current tariff regime is creating new opportunities for the company [40][41] Question: Restructuring actions progress - The company is on track with headquarters consolidation and has reduced headcount by approximately 500 people as part of the transformation [42][44] Question: End market outlook for commercial vehicles - Management expects a rebound in the commercial vehicle space in 2026, with ongoing interest from customers despite current softness in the market [45][47] Question: Sales guidance and program roll-offs - The sales guidance remains unchanged, with expected reductions in Stellantis programs and positive contributions from new program launches [54] Question: Data center bus bars market - The data center bus bars market is primarily focused on new construction, with opportunities for growth as the company expands its share [55][57] Question: EV sales distribution by region - In fiscal 2025, 55% of EV sales were in EMEA, 16% in Asia, and 30% in North America, indicating a diversified exposure to the EV market [60][61]