Financial Performance & Key Metrics - Q4 sales were $257 million, a decrease of $20 million year-over-year, but an increase of $17 million quarter-over-quarter[13, 26] - Adjusted loss from operations was $22 million, primarily due to $15 million in unplanned inventory adjustments[13] - Adjusted EBITDA was a negative $7 million[13] - Adjusted pre-tax loss was $29 million[13] - Adjusted EPS was a negative $0.77[13] - Free cash flow was $26 million, the highest level since FY23[10, 13] - Total debt remained at $318 million, while net debt decreased by $10 million to $214 million[13] - FY25 net sales were $1,048 million, compared to $1,115 million in FY24[13, 47] - FY25 Adjusted EBITDA was $43 million, compared to $55 million in FY24[13, 47] Business Segments & Market Trends - Data center power product sales reached a record of over $80 million in FY25, with similar or greater sales expected in FY26[11, 13] - xEV applications accounted for 20% of total consolidated net sales in both Q4 and FY25, up from 14% and 19% respectively in the prior year periods[13] Future Outlook & Guidance - FY26 sales guidance is in the range of $900 million to $1 billion[54, 56] - FY26 EBITDA guidance is in the range of $70 million to $80 million, representing a 100%+ increase despite ~$100 million lower sales[12, 54, 56]

Part I [Business](index=5&type=section&id=Item%201.%20Business) Methode Electronics, Inc. is a global supplier of custom-engineered mechatronic products for OEMs across diverse markets, operating through Automotive, Industrial, and Interface segments - The company designs, engineers, and produces mechatronic products for OEMs, focusing on user interface, LED lighting, power distribution, and sensor applications across transportation, cloud computing, construction, and consumer appliance end markets[20](index=20&type=chunk)[21](index=21&type=chunk) - The company operates through three primary segments: Automotive (electronic/electro-mechanical devices), Industrial (lighting, safety controls, power products), and Interface (data center and appliance solutions), with the Medical segment discontinued in October 2023[23](index=23&type=chunk)[24](index=24&type=chunk)[27](index=27&type=chunk) - As of May 3, 2025, the company's global workforce totaled approximately **6,500 employees** and **800 contractors**, with about **95% located outside the U.S.**[40](index=40&type=chunk) Net Sales by Segment (Fiscal Years 2023-2025) | | Fiscal Year Ended | | | |---|---|---|---| | | May 3, 2025 | April 27, 2024 | April 29, 2023 | | Automotive | 48.6% | 53.7% | 62.4% | | Industrial | 46.5% | 41.3% | 32.6% | | Interface | 4.9% | 4.8% | 4.7% | | Medical | —% | 0.2% | 0.3% | Research and Development Expenditures (Fiscal Years 2023-2025) | Fiscal Year | R&D Costs (in millions) | |---|---| | 2025 | $41.8 | | 2024 | $49.1 | | 2023 | $35.0 | [Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant operational, financial, legal, and technological risks, including automotive industry dependence, debt covenant non-compliance, and ongoing litigation - A substantial portion of revenue comes from the automotive, commercial vehicle, and construction industries, making the company susceptible to cyclical downturns and factors like changing EV demand, which has recently softened[51](index=51&type=chunk)[54](index=54&type=chunk) - The five largest customers accounted for approximately **36% of consolidated net sales** in fiscal 2025, highlighting customer concentration risk due to significant program roll-offs[64](index=64&type=chunk)[76](index=76&type=chunk) - The company is exposed to financial risks from its debt, having been non-compliant with leverage and interest coverage ratio covenants as of May 3, 2025, though an amendment was secured to waive the default and relax future covenants[83](index=83&type=chunk) - The company recorded a significant non-cash goodwill impairment charge of **$105.9 million** in fiscal 2024 and inventory obsolescence charges of **$20.4 million** in fiscal 2025[87](index=87&type=chunk)[89](index=89&type=chunk) - The company is subject to a putative shareholder class action lawsuit and an ongoing SEC investigation concerning foreign operations, financial reporting, and internal controls[96](index=96&type=chunk)[97](index=97&type=chunk) [Unresolved Staff Comments](index=19&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[107](index=107&type=chunk) [Cybersecurity](index=19&type=section&id=Item%201C.%20Cybersecurity) The company manages cybersecurity risks through a dedicated program with Board and Audit Committee oversight, led by the CIO/CISO - The Board of Directors and Audit Committee provide oversight for cybersecurity, receiving regular updates from the Chief Information Officer (CIO), who also serves as the Chief Information Security Officer (CISO)[108](index=108&type=chunk)[112](index=112&type=chunk) - The company utilizes third-party firms for assessments and has an incident response plan to manage and mitigate threats, led by the CIO/CISO with over 25 years of experience[109](index=109&type=chunk)[114](index=114&type=chunk) - To date, the company has not experienced a cybersecurity incident that has materially affected its business strategy, results of operations, or financial condition[111](index=111&type=chunk) [Properties](index=20&type=section&id=Item%202.%20Properties) The company's corporate headquarters is in Chicago, Illinois, operating 31 global facilities, including key manufacturing sites in China, Mexico, Malta, and Egypt Significant Properties as of May 3, 2025 | Location | Use | Owned/Leased | Approx. Sq. Footage | |---|---|---|---| | Lontzen, Belgium | Manufacturing/Warehousing | Owned | 135,500 | | Dongguan, China | Manufacturing | Leased | 324,000 | | Shanghai, China | Manufacturing | Leased | 50,000 | | Suzhou, China | Manufacturing | Leased | 376,000 | | Cairo, Egypt | Manufacturing | Leased | 330,000 | | Chicago, Illinois | Corporate Headquarters | Leased | 24,000 | | McAllen, Texas | Warehousing | Leased | 230,000 | | Mriehel, Malta | Manufacturing | Leased | 383,000 | | Monterrey, Mexico | Manufacturing | Leased | 379,000 | | Santa Catarina Nuevo León, Mexico | Manufacturing | Leased | 158,000 | [Legal Proceedings](index=20&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal matters, with significant pending proceedings detailed in Note 12 to the consolidated financial statements - The company is involved in various litigation matters, with details on pending legal proceedings available in Note 12, 'Commitments and Contingencies' in the consolidated financial statements[118](index=118&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[119](index=119&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Methode's common stock trades on the NYSE under 'MEI', with a new **$200.0 million** share buyback authorized, though stock performance has significantly underperformed benchmarks - In June 2024, the Board approved a new share buyback authorization for up to **$200.0 million** of common stock, effective through June 17, 2026, with no purchases made under this new authorization[125](index=125&type=chunk) - The company's stock performance shows a cumulative total return of **$26.53** on an initial **$100 investment** from May 2020 to May 2025, significantly underperforming the Russell 2000 Index (**$171.33**) and its peer groups[131](index=131&type=chunk) Issuer Purchases of Equity Securities (Q4 FY2025) | Period | Total number of shares purchased | Average price paid per share | Approximate dollar value of shares that may yet be purchased (in millions) | |---|---|---|---| | Feb 2 - Mar 1, 2025 | 27,784 | $10.80 | $200.0 | | Mar 2 - Apr 5, 2025 | 63,799 | $6.55 | $200.0 | | Apr 6 - May 3, 2025 | 13,445 | $6.27 | $200.0 | *Note: All shares purchased were surrendered by employees to satisfy tax withholding on vested RSUs, not as part of a publicly announced plan* [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2025 net sales decreased by **6.0%** to **$1,048.1 million**, driven by Automotive declines offset by Industrial growth, resulting in a net loss of **$62.6 million** [Consolidated Results of Operations](index=26&type=section&id=Consolidated%20Results%20of%20Operations) - Net sales decreased by **$66.4 million (6.0%)** in fiscal 2025, primarily due to lower sales in the Automotive segment, partially offset by higher sales in the Industrial segment[143](index=143&type=chunk) - Gross profit margin decreased from **16.0% to 15.6%**, mainly due to **$10.0 million** in higher inventory obsolescence expense, partially offset by a favorable product mix[144](index=144&type=chunk)[145](index=145&type=chunk) - Selling and administrative expenses increased by **$3.0 million**, driven by higher professional fees of **$9.8 million** for consulting and interim executive services from AlixPartners[146](index=146&type=chunk) - The net loss of **$62.6 million** in fiscal 2025 was an improvement over the **$123.3 million** net loss in fiscal 2024, which was heavily impacted by a **$105.9 million** goodwill impairment charge[147](index=147&type=chunk)[154](index=154&type=chunk) Consolidated Results of Operations (FY2025 vs. FY2024) | (in millions) | Fiscal Year Ended May 3, 2025 (53 Weeks) | Fiscal Year Ended April 27, 2024 (52 Weeks) | |---|---|---| | Net sales | $1,048.1 | $1,114.5 | | Gross profit | $163.4 | $178.8 | | Goodwill impairment | $— | $105.9 | | Net loss | $(62.6) | $(123.3) | [Operating Segments](index=27&type=section&id=Operating%20Segments) - Automotive net sales fell **14.9%** due to program roll-offs and lower volumes in North America and Asia, despite growth in EMEA from new program launches[156](index=156&type=chunk)[157](index=157&type=chunk) - Industrial net sales grew **5.9%**, driven by higher sales of power distribution products for data centers, which offset lower sales in commercial vehicle and off-road equipment markets[161](index=161&type=chunk) - The Medical segment (Dabir Surfaces business) was discontinued in Q1 fiscal 2024 and certain assets were sold, resulting in no sales or operations for this segment in fiscal 2025[167](index=167&type=chunk) Automotive Segment Performance (FY2025 vs. FY2024) | (in millions) | FY2025 | FY2024 | |---|---|---| | Net sales | $508.9 | $598.2 | | Gross profit | $4.7 | $30.4 | | Loss from operations | $(47.7) | $(140.2) | Industrial Segment Performance (FY2025 vs. FY2024) | (in millions) | FY2025 | FY2024 | |---|---|---| | Net sales | $487.4 | $460.1 | | Gross profit | $144.2 | $137.7 | | Income from operations | $90.0 | $88.8 | Interface Segment Performance (FY2025 vs. FY2024) | (in millions) | FY2025 | FY2024 | |---|---|---| | Net sales | $51.8 | $53.8 | | Gross profit | $12.7 | $10.3 | | Income from operations | $10.3 | $6.9 | [Financial Condition, Liquidity and Capital Resources](index=29&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) - As of May 3, 2025, the company was not in compliance with its credit agreement's consolidated leverage and interest coverage ratio covenants, but subsequently entered a Third Amendment on July 7, 2025, which waived the default, reduced the revolving credit facility from **$500 million to $400 million**, and relaxed future covenants[173](index=173&type=chunk)[388](index=388&type=chunk) - The Amended Credit Agreement, maturing in October 2027, now includes stricter terms such as an 'anti-cash hoarding' requirement and increased interest rates during a specified 'Third Amendment Period'[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - Net cash from operating activities decreased by **$21.1 million**, primarily due to lower net income (adjusted for non-cash items) and smaller favorable changes in working capital[179](index=179&type=chunk) Cash Flow Summary (FY2025 vs. FY2024) | (in millions) | FY2025 | FY2024 | |---|---|---| | Net cash provided by operating activities | $26.4 | $47.5 | | Net cash used in investing activities | $(32.9) | $(17.5) | | Net cash used in financing activities | $(58.9) | $(18.9) | | (Decrease) increase in cash and cash equivalents | $(57.9) | $4.5 | [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Goodwill impairment testing is a critical estimate, with the fair value of the Nordic Lights unit exceeding its carrying value by less than **10%**[186](index=186&type=chunk)[188](index=188&type=chunk) - A sensitivity analysis for the Nordic Lights reporting unit indicated that a **100 basis point increase** in the discount rate would result in a goodwill impairment of approximately **$7.3 million**[188](index=188&type=chunk) - Income tax accounting requires significant judgment, particularly in evaluating the realizability of deferred tax assets, with a valuation allowance of **$20.7 million** as of May 3, 2025[191](index=191&type=chunk)[193](index=193&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages market risks from foreign currency, interest rates, and commodity prices using derivative instruments, not for speculation - The company uses foreign currency forward contracts to hedge balance sheet exposure, with a notional value of **$107.2 million** as of May 3, 2025[198](index=198&type=chunk) - The company is exposed to interest rate risk on its **$319.4 million** of variable-rate borrowings, using interest rate swaps to manage this, where a hypothetical **1% increase** in interest rates would increase annual interest expense by an estimated **$1.7 million**, net of swaps[200](index=200&type=chunk) - The company faces commodity price risk for materials like copper and resins, where cost fluctuations can impact gross margins due to difficulties in passing on increases to customers[201](index=201&type=chunk) [Financial Statements and Supplementary Data](index=34&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section indicates that the consolidated financial statements and supplementary data are filed under Item 15 of the report - The consolidated financial statements and supplementary data are filed under Item 15, 'Exhibits, Financial Statement Schedules'[202](index=202&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=34&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None reported[202](index=202&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of May 3, 2025, having remediated prior material weaknesses - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of May 3, 2025[203](index=203&type=chunk) - Three material weaknesses identified in fiscal 2024 were successfully remediated in fiscal 2025, relating to ineffective IT general controls, goodwill impairment analyses, and GAAP application to non-routine events[208](index=208&type=chunk)[210](index=210&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of May 3, 2025, based on the COSO framework[205](index=205&type=chunk) [Other Information](index=36&type=section&id=Item%209B.%20Other%20Information) This section details the Third Amendment to the company's credit agreement, which waived a financial covenant default and adjusted terms - On July 7, 2025, the company entered into a Third Amendment to its credit agreement, disclosed under Item 9B due to its timing within four business days of the 10-K filing[213](index=213&type=chunk)[214](index=214&type=chunk) - The amendment waived a default for non-compliance with financial covenants for the quarter ended May 3, 2025[216](index=216&type=chunk) - Key terms of the amendment include reducing revolving credit commitments from **$500 million to $400 million**, relaxing financial covenants, increasing interest rates, and extending an 'anti-cash hoarding' requirement[215](index=215&type=chunk)[216](index=216&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=38&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance matters is incorporated by reference from the company's 2025 annual shareholders' meeting proxy statement - Information is incorporated by reference from the 2025 annual meeting proxy statement[221](index=221&type=chunk) [Executive Compensation](index=38&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2025 annual shareholders' meeting proxy statement - Information is incorporated by reference from the 2025 annual meeting proxy statement[222](index=222&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=38&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the company's 2025 proxy statement, including details on equity compensation plans Equity Compensation Plan Information as of May 3, 2025 | Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans | |---|---|---|---| | Equity compensation plans approved by security holders | 1,686,872 | $ — | 3,497,871 | | Equity compensation plans not approved by security holders | — | $ — | — | | Total | 1,686,872 | $ — | 3,497,871 | [Certain Relationships and Related Transactions, and Director Independence](index=38&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's 2025 annual shareholders' meeting proxy statement - Information is incorporated by reference from the 2025 annual meeting proxy statement[225](index=225&type=chunk) [Principal Accountant Fees and Services](index=38&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's 2025 annual shareholders' meeting proxy statement - Information is incorporated by reference from the 2025 annual meeting proxy statement[225](index=225&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=39&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section contains the index to the consolidated financial statements, the financial statement schedule, and a comprehensive list of all exhibits filed with the 10-K [Report of Independent Registered Public Accounting Firm](index=45&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) - Ernst & Young LLP issued an unqualified opinion, stating that the consolidated financial statements are presented fairly, in all material respects, in conformity with U.S. GAAP[244](index=244&type=chunk) - The auditor also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of May 3, 2025, based on the COSO framework[245](index=245&type=chunk)[255](index=255&type=chunk) - A Critical Audit Matter (CAM) was identified related to the Goodwill Impairment Assessment of the Nordic Lights Reporting Unit, due to the complex and highly judgmental estimation required for fair value determination[249](index=249&type=chunk)[250](index=250&type=chunk) [Consolidated Financial Statements](index=48&type=section&id=Consolidated%20Financial%20Statements) Consolidated Balance Sheets (in millions) | | May 3, 2025 | April 27, 2024 | |---|---|---| | **Total current assets** | $559.9 | $637.7 | | **Total assets** | $1,305.8 | $1,403.5 | | **Total current liabilities** | $233.2 | $231.4 | | **Total liabilities** | $612.5 | $637.5 | | **Total shareholders' equity** | $693.3 | $766.0 | Consolidated Statements of Operations (in millions) | | FY2025 | FY2024 | FY2023 | |---|---|---|---| | Net sales | $1,048.1 | $1,114.5 | $1,179.6 | | Gross profit | $163.4 | $178.8 | $264.1 | | (Loss) income from operations | $(23.9) | $(112.0) | $90.4 | | Net (loss) income attributable to Methode | $(62.6) | $(123.3) | $77.1 | | Diluted (loss) income per share | $(1.77) | $(3.48) | $2.10 | Consolidated Statements of Cash Flows (in millions) | | FY2025 | FY2024 | FY2023 | |---|---|---|---| | Net cash provided by operating activities | $26.4 | $47.5 | $132.8 | | Net cash used in investing activities | $(32.9) | $(17.5) | $(153.1) | | Net cash (used in) provided by financing activities | $(58.9) | $(18.9) | $3.2 | | (Decrease) increase in cash and cash equivalents | $(57.9) | $4.5 | $(15.0) | [Schedule II — Valuation and Qualifying Accounts](index=85&type=section&id=Schedule%20II%20%E2%80%94%20Valuation%20and%20Qualifying%20Accounts) Valuation and Qualifying Accounts (in millions) | Description | Balance at beginning of FY2025 | Charges to income | Deductions | Balance at end of FY2025 | |---|---|---|---|---| | Allowance for uncollectible accounts | $1.4 | $2.7 | $(1.1) | $3.0 | | Inventory obsolescence reserves | $25.9 | $20.4 | $(17.8) | $28.9 | | Deferred tax valuation allowance | $5.8 | $14.9 | $— | $20.7 |

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) The company navigated significant operational challenges in fiscal 2025, impacting quarterly and full-year results while maintaining a focus on strategic transformation [Management Commentary & Strategic Highlights](index=1&type=section&id=Management%20Commentary%20%26%20Strategic%20Highlights) Management details its transformation progress amid significant challenges, including a major customer ramp-down and inventory write-downs - The company is undergoing a transformation, focusing on improving operational execution to drive long-term value[3](index=3&type=chunk) - Experienced significant challenges, including a ramp-down in demand from a major EV customer and **inventory write-downs** for canceled or delayed programs[3](index=3&type=chunk) - Achieved **record sales for data center power products**, finishing the year at over **$80 million**[3](index=3&type=chunk) - Generated **strong free cash flow** for the second consecutive quarter, enabling debt reduction[3](index=3&type=chunk) - Corporate actions include reducing the board size, relocating headquarters, reducing the dividend, and continuing a portfolio review[5](index=5&type=chunk) - For fiscal 2026, the company expects to **double its EBITDA** despite an anticipated **$100 million sales decline** due to lower EV demand[5](index=5&type=chunk) [Fourth Quarter Fiscal 2025 Performance](index=1&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Performance) Fourth quarter results show decreased net sales to $257.1 million and a net loss of $28.3 million, impacted by inventory adjustments but with improved free cash flow Q4 Fiscal 2025 Key Financial Metrics | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $257.1M | $277.3M | (7.3%) | | Loss from Operations | $(23.6)M | $(61.5)M | Improved | | Net Loss | $(28.3)M | $(57.3)M | Improved | | Diluted Loss per Share | $(0.80) | $(1.63) | Improved | | Adjusted Net Loss | $(27.4)M | $(7.9)M | Worsened | | Adjusted Diluted Loss per Share | $(0.77) | $(0.23) | Worsened | | Free Cash Flow | $26.3M | $15.8M | +66.5% | - The quarter's pre-tax loss included **$15.2 million of unplanned inventory adjustments**, primarily related to materials for reduced, delayed, or canceled programs[3](index=3&type=chunk)[4](index=4&type=chunk) - Total debt was reduced to **$317.6 million** from $327.9 million in the previous quarter, and net debt decreased to **$214.0 million** from $224.1 million[4](index=4&type=chunk)[10](index=10&type=chunk) [Full Year Fiscal 2025 Performance](index=3&type=section&id=Full%20Year%20Fiscal%202025%20Performance) For fiscal year 2025, net sales were $1,048.1 million, down 6.0%, driven by lower Automotive volumes partially offset by record Industrial sales Full Year Fiscal 2025 Key Financial Metrics | Metric | FY 2025 (53 wks) | FY 2024 (52 wks) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,048.1M | $1,114.5M | (6.0%) | | Loss from Operations | $(23.9)M | $(112.0)M | Improved | | Net Loss | $(62.6)M | $(123.3)M | Improved | | Diluted Loss per Share | $(1.77) | $(3.48) | Improved | | Adjusted Net Loss | $(39.7)M | $(15.0)M | Worsened | | Adjusted EBITDA | $42.5M | $55.3M | (23.1%) | - The decrease in annual sales was mainly due to lower volume in the Automotive segment, partially offset by **record volume in the Industrial segment** from data center power products[12](index=12&type=chunk) - Gross profit was impacted by a **$20.4 million expense for excess and obsolete inventory**, compared to $10.4 million in the prior year[13](index=13&type=chunk) [Segment Performance (Q4 2025)](index=3&type=section&id=Segment%20Performance%20(Q4%202025)) A review of Q4 2025 segment performance highlights strong growth in Industrial, a significant decline in Automotive, and a smaller drop in Interface [Automotive Segment](index=3&type=section&id=Automotive%20Segment) The Automotive segment's net sales fell 22.6% to $112.9 million in Q4 due to a program roll-off, resulting in an operating loss of $33.7 million Automotive Segment Q4 Performance (YoY) | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $112.9M | $145.9M | (22.6%) | | Loss from Operations | $(33.7)M | $(64.9)M | Improved | - The sales decrease was mainly due to lower volume in North America from a center console program roll-off and reduced exterior lighting product sales[15](index=15&type=chunk) [Industrial Segment](index=3&type=section&id=Industrial%20Segment) The Industrial segment delivered strong Q4 growth, with net sales rising 13.1% to $132.6 million, driven by demand for data center products Industrial Segment Q4 Performance (YoY) | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $132.6M | $117.2M | +13.1% | | Income from Operations | $26.2M | $20.0M | +31.0% | | Operating Margin | 19.8% | 17.1% | +270 bps | - The sales increase was primarily driven by **higher demand for power distribution products for data centers**[15](index=15&type=chunk) [Interface Segment](index=3&type=section&id=Interface%20Segment) The Interface segment's net sales declined to $11.6 million in Q4, but operating income remained stable, leading to an improved operating margin Interface Segment Q4 Performance (YoY) | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $11.6M | $14.2M | (18.3%) | | Income from Operations | $1.5M | $1.5M | Unchanged | [Corporate Actions and Future Outlook](index=4&type=section&id=Corporate%20Actions%20and%20Future%20Outlook) The company announced a reduced quarterly dividend and provided its financial guidance for fiscal year 2026 [Dividend Announcement](index=4&type=section&id=Dividend%20Announcement) The Board of Directors approved a reduced quarterly dividend of $0.07 per share, payable on August 1, 2025 - The Board of Directors declared a quarterly dividend of **$0.07 per share**, payable on August 1, 2025, to stockholders of record on July 21, 2025[17](index=17&type=chunk) [Fiscal 2026 Guidance](index=4&type=section&id=Fiscal%202026%20Guidance) For fiscal 2026, the company projects net sales of $900-$1,000 million and EBITDA of $70-$80 million, with a stronger second half expected Fiscal 2026 Guidance | Metric | Guidance Range | | :--- | :--- | | Net Sales | $900M - $1,000M | | EBITDA | $70M - $80M | - The second half of fiscal 2026 is expected to be **stronger than the first half**[18](index=18&type=chunk) - Guidance is subject to risks including tariffs, EV program take rates, cost recovery actions, inflation, and supply chain disruptions[19](index=19&type=chunk) [Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section provides the unaudited consolidated statements of operations, balance sheets, and cash flows for fiscal year 2025 [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents the company's unaudited consolidated statements of operations for the fourth quarter and full fiscal year ended May 3, 2025 Consolidated Statements of Operations (in millions) | | Three Months Ended | Fiscal Year Ended | | :--- | :--- | :--- | | | **May 3, 2025** | **April 27, 2024** | **May 3, 2025** | **April 27, 2024** | | Net sales | $257.1 | $277.3 | $1,048.1 | $1,114.5 | | Gross profit | $19.6 | $35.5 | $163.4 | $178.8 | | Loss from operations | $(23.6) | $(61.5) | $(23.9) | $(112.0) | | Pre-tax loss | $(30.4) | $(63.1) | $(50.1) | $(128.1) | | Net loss | $(28.3) | $(57.3) | $(62.6) | $(123.3) | | Diluted loss per share | $(0.80) | $(1.63) | $(1.77) | $(3.48) | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) This section provides the company's unaudited consolidated balance sheets as of May 3, 2025, and April 27, 2024 Consolidated Balance Sheet Highlights (in millions) | | May 3, 2025 | April 27, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $103.6 | $161.5 | | Total current assets | $559.9 | $637.7 | | Total assets | $1,305.8 | $1,403.5 | | **Liabilities & Equity** | | | | Total current liabilities | $233.2 | $231.4 | | Long-term debt | $317.4 | $330.7 | | Total liabilities | $612.5 | $637.5 | | Total shareholders' equity | $693.3 | $766.0 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section details cash flows from operating, investing, and financing activities for the fiscal year ended May 3, 2025 Consolidated Statement of Cash Flows Highlights (in millions) | | Fiscal Year Ended May 3, 2025 | Fiscal Year Ended April 27, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $26.4 | $47.5 | | Net cash used in investing activities | $(32.9) | $(17.5) | | Net cash used in financing activities | $(58.9) | $(18.9) | | (Decrease) increase in cash | $(57.9) | $4.5 | | Cash and cash equivalents at end of period | $103.6 | $161.5 | [Reconciliation of Non-GAAP Measures](index=10&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This section provides detailed reconciliations of GAAP results to non-GAAP measures like Adjusted EBITDA, Free Cash Flow, and Adjusted Net Loss [Reconciliation of EBITDA, Free Cash Flow, and Net Debt](index=10&type=section&id=Reconciliation%20of%20EBITDA%2C%20Free%20Cash%20Flow%2C%20and%20Net%20Debt) This section reconciles GAAP Net Loss to Adjusted EBITDA and presents calculations for Free Cash Flow and Net Debt Adjusted EBITDA Reconciliation (in millions) | | Q4 FY2025 | Q4 FY2024 | FY 2025 | FY 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Loss | $(28.3) | $(57.3) | $(62.6) | $(123.3) | | EBITDA | $(8.9) | $(44.0) | $30.4 | $(53.5) | | Adjusted EBITDA | $(7.1) | $5.3 | $42.5 | $55.3 | Free Cash Flow and Net Debt (in millions) | Metric | Q4 FY2025 | Q4 FY2024 | May 3, 2025 | Feb 1, 2025 | | :--- | :--- | :--- | :--- | :--- | | Free Cash Flow | $26.3 | $15.8 | - | - | | Net Debt | - | - | $214.0 | $224.1 | [Reconciliation of Adjusted Operating Loss, Net Loss, and EPS](index=11&type=section&id=Reconciliation%20of%20Adjusted%20Operating%20Loss%2C%20Net%20Loss%2C%20and%20EPS) This section reconciles GAAP operating loss, pre-tax loss, and net loss to their adjusted (non-GAAP) counterparts for Q4 and the full fiscal year Q4 2025 GAAP to Non-GAAP Reconciliation (in millions, except per share) | Metric | U.S. GAAP | Non-U.S. GAAP (Adjusted) | | :--- | :--- | :--- | | Loss from operations | $(23.6) | $(21.6) | | Pre-tax loss | $(30.4) | $(28.6) | | Net loss | $(28.3) | $(27.4) | | Diluted loss per share | $(0.80) | $(0.77) | Full Year 2025 GAAP to Non-GAAP Reconciliation (in millions, except per share) | Metric | U.S. GAAP | Non-U.S. GAAP (Adjusted) | | :--- | :--- | :--- | | Loss from operations | $(23.9) | $(12.5) | | Pre-tax loss | $(50.1) | $(38.0) | | Net loss | $(62.6) | $(39.7) | | Diluted loss per share | $(1.77) | $(1.12) |

Core Insights - Methode Electronics reported a net loss of $28.3 million for the fourth quarter of fiscal 2025, an improvement from a loss of $57.3 million in the same quarter of fiscal 2024, primarily due to a significant goodwill impairment in the prior year [7][14]. - The company experienced a decrease in net sales to $257.1 million, down from $277.3 million in the same quarter of fiscal 2024, largely attributed to lower volume in the Automotive segment [4][12]. - Despite challenges, Methode achieved record sales in data center power products, exceeding $80 million for the fiscal year, and reported strong free cash flow of $26.3 million for the quarter [3][10]. Financial Performance - For fiscal 2025, Methode's total net sales were $1,048.1 million, a decline from $1,114.5 million in fiscal 2024, with the Automotive segment's performance negatively impacting overall sales [12]. - The loss from operations for the fourth quarter was $23.6 million, an improvement from a loss of $61.5 million in the same quarter of the previous year [5][13]. - The adjusted net loss for the fourth quarter was $27.4 million, compared to a loss of $7.9 million in the same quarter of fiscal 2024 [7][14]. Segment Performance - The Automotive segment reported net sales of $112.9 million, down 22.6% from $145.9 million, primarily due to program roll-offs and lower demand [11]. - The Industrial segment saw an increase in net sales to $132.6 million, up 13.1% from $117.2 million, driven by higher demand for power distribution products for data centers [11]. - Electric and hybrid vehicle applications accounted for 20% of net sales, indicating a significant reliance on this segment despite recent demand challenges [5]. Cash Flow and Debt Management - Net cash provided by operating activities was $35.4 million for the quarter, an increase from $24.9 million in the same quarter of fiscal 2024 [10]. - Free cash flow reached $26.3 million, marking the highest quarter since fiscal 2023, attributed to improvements in working capital [10]. - Total debt decreased to $317.6 million from $327.9 million in the previous quarter, with net debt also reduced to $214.0 million [9]. Future Outlook - For fiscal 2026, Methode expects net sales to range between $900 million and $1,000 million, with EBITDA projected between $70 million and $80 million [17]. - The company anticipates doubling its EBITDA in fiscal 2026 despite an expected decline of approximately $100 million in sales due to lower demand from electric vehicle customers [3][17].

Company Overview - Methode Electronics, Inc. is a leading global supplier of custom-engineered solutions for user interface, lighting system, and power distribution applications [5] - The company operates in various end markets including transportation, cloud computing infrastructure, construction equipment, and consumer appliances [6] - Methode's business is segmented into Automotive, Industrial, and Interface [6] Financial Results Announcement - The company will release its fourth quarter and full year fiscal 2025 results for the period ended May 3, 2025, on July 9, 2025, after market close [1] - A conference call and webcast will be held on July 10, 2025, at 10:00 a.m. CDT to review financial and operational highlights [2] - The call will be led by President and CEO Jon DeGaynor and CFO Laura Kowalchik [2] Participation and Replay Information - To participate in the conference call, dial 888-506-0062 (domestic) or 973-528-0011 (international) at least five minutes prior to the start [3] - A replay of the teleconference will be available until July 24, 2025, by dialing 877-481-4010 with passcode 52484 [4] - A webcast replay will also be accessible on the company's website [4]

Core Insights - Methode Electronics, Inc.'s Grakon business unit has been recognized as a top-performing supplier by PACCAR, a manufacturer of Kenworth and Peterbilt trucks [1][4] - The recognition is part of PACCAR's Supplier Performance Management (SPM) Program, which evaluates suppliers based on product development, operations, aftermarket support, and alignment with PACCAR's business objectives [2] - Grakon has played a significant role in multiple PACCAR launches, providing advanced lighting solutions for various truck models [3] Company Overview - Grakon, LLC specializes in the design, development, and manufacture of advanced lighting systems, controls, and components for OEM manufacturers in heavy trucks, buses, rail, commercial electric vehicles, and power sports markets [5] - Grakon operates as a business unit of Methode Electronics, Inc., which is a global supplier of custom-engineered solutions with a presence in North America, Europe, the Middle East, and Asia [5]

Core Insights - Methode Electronics, Inc.'s Grakon business unit has been recognized as a top-performing supplier by PACCAR, a manufacturer of Kenworth and Peterbilt trucks [1][4] - The recognition is part of PACCAR's Supplier Performance Management (SPM) Program, which evaluates suppliers based on product development, operations, aftermarket support, and alignment with PACCAR's business objectives [2] - Grakon has played a significant role in multiple PACCAR launches, providing advanced interior and exterior lighting solutions [3] Company Overview - Grakon, LLC specializes in the design, development, and manufacture of advanced lighting systems, controls, and components for various markets, including heavy trucks, buses, and commercial electric vehicles [5] - Grakon operates as a business unit of Methode Electronics, Inc., which is a global supplier of custom-engineered solutions with a presence in North America, Europe, the Middle East, and Asia [5]

Methode Electronics, Inc. (NYSE:MEI) Q3 2025 Earnings Conference Call March 6, 2025 11:00 AM ET Company Participants Robert Cherry - Investor Relations Jonathan DeGaynor - President and Chief Executive Officer Laura Kowalchik - Chief Financial Officer Conference Call Participants John Franzreb - Sidoti Luke Junk - Baird Gary Prestopino - Barrington Research Operator Good day, everyone. Welcome to the Methode Electronics Third Quarter Fiscal 2025 Results Conference Call. [Operator Instructions] I would now l ...

Methode Electronics, Inc. Earnings Presentation Third Quarter Fiscal 2025 March 6, 2025 Forward-Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect, when made, our current views with respect to current events and financial performance. Such forward-looking statements are subject to many risks, uncertainties and factors relating to our operations and business environment, which may cause our actual re ...

Financial Performance - Net sales decreased by $19.6 million, or 7.6%, to $239.9 million in the three months ended February 1, 2025, compared to $259.5 million in the same period last year [129]. - Net sales for the nine months ended February 1, 2025, decreased by $46.2 million, or 5.5%, to $791.0 million compared to $837.2 million in the prior year [130]. - Net sales in the Automotive segment decreased by $24.0 million, or 17.2%, to $115.7 million in the three months ended February 1, 2025, compared to $139.7 million in the same period last year [145]. - Net loss was $14.4 million in the three months ended February 1, 2025, compared to $11.6 million in the same period last year [143]. - Income tax expense was $6.2 million with a -75.6% effective tax rate in the three months ended February 1, 2025, compared to $1.1 million with a -10.5% effective tax rate in the same period last year [141]. Cost and Expenses - Cost of products sold decreased by $23.9 million, or 10.7%, to $198.6 million in the three months ended February 1, 2025, representing 82.8% of net sales [131]. - Selling and administrative expenses increased by $3.8 million, or 11.2%, to $37.7 million in the three months ended February 1, 2025, representing 15.7% of net sales [134]. - Interest expense, net increased to $5.5 million in the three months ended February 1, 2025, compared to $5.0 million in the same period last year [138]. Profitability - Gross profit margin increased to 17.2% of net sales in the three months ended February 1, 2025, compared to 14.3% in the same period last year [133]. - Gross profit in the Automotive segment decreased by $1.5 million, or 33.3%, to $3.0 million in the three months ended February 1, 2025, with gross profit margins decreasing to 2.6% [149]. - Industrial segment gross profit increased by $4.9 million, or 16.2%, to $35.2 million in the three months ended February 1, 2025, with gross profit margins increasing to 31.5% [156]. - Interface segment gross profit increased by $0.7 million, or 31.8%, to $2.9 million in the three months ended February 1, 2025, with gross profit margins increasing to 23.6% [163]. - Interface segment gross profit increased by $3.0 million, or 39.0%, to $10.7 million for the nine months ended February 1, 2025, compared to $7.7 million for the same period in 2024 [164]. - Gross profit margins improved to 26.6% in the nine months ended February 1, 2025, up from 19.4% in the nine months ended January 27, 2024 [164]. Segment Performance - Automotive segment loss from operations improved to $9.0 million in the three months ended February 1, 2025, compared to $11.0 million in the same period last year [151]. - Industrial segment net sales increased by $4.8 million, or 4.5%, to $111.9 million in the three months ended February 1, 2025, compared to $107.1 million in the same period last year [154]. - Interface segment net sales decreased by $0.4 million, or 3.1%, to $12.3 million in the three months ended February 1, 2025, compared to $12.7 million in the same period last year [161]. - Income from operations for the Interface segment rose by $3.4 million, or 63.0%, to $8.8 million for the nine months ended February 1, 2025, compared to $5.4 million for the same period in 2024 [165]. Cash Flow and Financial Position - As of February 1, 2025, the company had $103.8 million in cash and cash equivalents, with $71.4 million held in subsidiaries outside the U.S. [170]. - Net cash used in operating activities was $9.0 million for the nine months ended February 1, 2025, a decrease from net cash provided of $22.6 million for the same period in 2024 [177]. - Net cash used in investing activities was $26.7 million for the nine months ended February 1, 2025, compared to $39.0 million for the same period in 2024 [178]. - The company paid cash dividends of $15.3 million in the nine months ended February 1, 2025, compared to $15.0 million in the same period in 2024 [179]. - The outstanding balance under the revolving credit facility was $285.0 million in euro-denominated borrowings and $45.0 million in U.S. denominated borrowings as of February 1, 2025 [174]. - The company anticipates compliance with financial covenants in the Amended Credit Agreement, but future compliance is uncertain due to various risk factors [175]. Challenges and Strategic Decisions - The company continues to face challenges from global supply chain disruptions, including increased material and logistics costs [126]. - The adoption of electric vehicles (EVs) has been slower than anticipated, impacting the company's financial condition and results of operations [124]. - The company is monitoring the implications of new tariffs, including 25% tariffs on products from Canada and Mexico, which could affect margins and customer demand [121]. - The company has initiated the discontinuation of the Dabir business, which accounted for all of the Medical segment's financial results [167]. - The company recognized a goodwill impairment of $56.5 million in the Automotive segment in the nine months ended January 27, 2024 [136].