Core Insights - Methode Electronics, Inc. is a leading global supplier of custom-engineered solutions for user interface, lighting, and power distribution applications [1][2] - The company will present at the J.P. Morgan Auto Conference on August 12th at 12:40 p.m. EDT, with a webcast available on their website [1] - Methode Electronics operates in various end markets including transportation, cloud computing infrastructure, construction equipment, and consumer appliances [3] Company Overview - Methode Electronics has sales, engineering, and manufacturing locations across North America, Europe, the Middle East, and Asia [2] - The company designs, engineers, and produces mechatronic products for OEMs, utilizing a broad range of technologies [2] - The business is managed on a segment basis, with segments including Automotive, Industrial, and Interface [3]

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against Methode Electronics Inc. due to a class action complaint alleging breaches of fiduciary duties by the board of directors during the specified class period [1][2]. Group 1: Company Performance Issues - Methode Electronics lost highly skilled employees during the COVID-19 pandemic, impacting its transition from a low mix, high volume production model to a high mix, low production model at its Monterrey facility [2]. - The company's efforts to diversify its product offerings, particularly in the electric vehicle sector, faced significant challenges including production planning deficiencies, inventory shortages, and vendor issues [2]. - Manufacturing systems at the Monterrey facility experienced logistical defects such as improper system coding, shipping errors, and quality control failures, leading to delays in launching new electric vehicle programs [2]. - Methode Electronics is not on track to meet its 2023 diluted earnings-per-share guidance or the projected 6% organic sales compound annual growth rate, indicating that these estimates lacked a reasonable factual basis [2]. Group 2: Legal and Investor Relations - Long-term stockholders of Methode Electronics are encouraged to contact Bragar Eagel & Squire for discussions regarding their legal rights and potential claims related to the company's performance issues [1][3]. - The law firm represents both individual and institutional investors in complex litigation, indicating a focus on protecting shareholder rights [4].

Project Overview - Caldeira project has a large ionic clay resource globally at 1.5 billion tonnes @ 2,359 ppm TREO, including 526 ppm MREO[17] - The project's initial mine life is estimated to be 20 years based on the Pre-Feasibility Study (PFS)[23] - Drilling has been limited to approximately 15% of the total license area, indicating significant exploration upside[23] Financial Highlights - The project boasts a compelling post-tax NPV8 of US$1.3 billion, indicating strong potential for extending mine life and processing capacity[17,41] - The development capex is estimated at US$443 million, inclusive of contingency[41] - The average annual Total Rare Earth Oxide (TREO) production is projected to be 13,584 tonnes, representing approximately 8% of the global REO market[38] - Average annual Neodymium-Praseodymium (NdPr) Oxide production is estimated at 4,228 tonnes, representing about 7% of the global NdPr market[38] Operational Summary - The project plans for a 6Mtpa plant throughput, optimized for greater return on capital[38] - The Maiden Probable Ore Reserve is 103 million tonnes @ 4,091 ppm TREO, based on a minimum 100m x 100m drilling[38] - The Life of Mine (LOM) strip ratio is low at 0.38 (waste:ore)[50]

Group 1 - MEI Pharma, Inc. has entered into a private investment in public equity (PIPE) transaction for the purchase and sale of 29.2 million shares at $3.42 per share, expecting aggregate gross proceeds of approximately $100 million [1][2] - The company will appoint Charlie Lee to its board of directors, while current member Taheer Datoo will resign [2] - GSR will serve as the digital asset and treasury management advisor to oversee the implementation of its Litecoin Treasury Strategy [2] Group 2 - This transaction marks a significant milestone in MEI's long-term strategic plan, establishing it as the first publicly traded company to adopt Litecoin as a treasury reserve asset [3] - Litecoin, created by Charlie Lee in October 2011, is often referred to as the "silver to Bitcoin's gold" and has a proven track record of growth and reliability [3] - By integrating Litecoin into its treasury operations, MEI gains access to a decentralized monetary asset that complements its cash management framework [3] Group 3 - MEI Pharma stock is trading higher, up 31.54% at $5.92 [4]

Company Overview - Methode Electronics, Inc. is an American engineering company specializing in the development and manufacture of mechatronic electronic components for industrial and transportation OEM customers [1] - The main areas of activity for Methode include automotive systems and industrial applications [1] Analyst Background - The analyst has over six years of experience in the investment world, starting as an equity analyst at European banks [1] - The analyst has worked across various sectors, including telecom and industry, focusing on uncovering value in financial statements [1] - The analyst holds a bachelor's degree from Antwerp, a master's from KU Leuven, and an MBA in Finance from Vlerick [1] Investment Focus - The analyst is currently building an investment project focused on the CIS region, applying Western analytical tools to identify hidden value in emerging markets [1]

Financial Data and Key Metrics Changes - The fourth quarter net sales were $257.1 million, a decrease of 7% year-over-year but an increase of 7% sequentially from Q3 [32][42] - Adjusted loss from operations for the fourth quarter was $21.6 million, a decrease of $11.8 million from the previous fiscal year [33] - Fourth quarter adjusted EBITDA was a negative $7.1 million, down $12.4 million from the same period last year [35] - Full year net sales were $1.048 billion, a decrease of 6% from the previous fiscal year [42] Business Line Data and Key Metrics Changes - Record sales for power products in data center applications exceeded $80 million for the full year, almost double that of fiscal 2024 [13][42] - EV sales represented 20% of consolidated total sales, an increase from 14% year-over-year, but sequentially decreased by approximately 10% from Q3 [15] - The company expects a 10% to 15% decline in EV sales for fiscal 2026 due to weaker market demand and program delays [16] Market Data and Key Metrics Changes - The company experienced significant sales headwinds from the roll-off of major auto programs, particularly the GM center console and EV lighting programs [11][42] - The decline in sales was primarily driven by the impact of these program roll-offs, which had a combined year-over-year impact of $111 million [42] Company Strategy and Development Direction - The company is focused on improving operational execution and successfully launching a large pipeline of new programs, with 22 new programs launched in fiscal 2025 and another 30 expected in fiscal 2026 [18][19] - The transformation strategy aims to stabilize the organization and position it for future growth, particularly in data centers and EV markets [20][27] - The company plans to optimize its footprint and reevaluate its product portfolio to align with market opportunities [22][27] Management's Comments on Operating Environment and Future Outlook - Management indicated that fiscal 2026 will be a reset year due to EV program delays, particularly from Stellantis, but expects a return to growth in fiscal 2027 [7][10] - The company anticipates doubling its EBITDA in fiscal 2026 despite projected declining sales of approximately $100 million [10][28] - Management emphasized the importance of operational improvements and cost recovery actions in response to external challenges [16][17] Other Important Information - The company recorded $26 million in free cash flow for the quarter, marking the best quarter since Q4 of fiscal 2023 [8] - The company reduced both debt and net debt levels by $10 million from Q3 [17] - The board reduced the dividend, which was a strategic decision to provide more flexibility from a working capital perspective [92] Q&A Session Summary Question: How to understand the expected sales decline and EBITDA increase? - Management explained that operational improvements and the elimination of one-time expenses will contribute to the expected EBITDA increase despite declining sales [52][54] Question: What percentage of the new launches are EV platforms? - Approximately 50% of the new launches are related to EV platforms, with a significant focus on data center growth as well [56][74] Question: What is the status of Stellantis revenue expectations? - Management confirmed a significant reduction in expected revenue from Stellantis, with a $200 million swing from previous projections due to program delays [44][80] Question: What is the leverage waiver status? - The leverage covenants were relaxed through the next year, starting at 4.25 for Q4 of fiscal 2025 [62][64] Question: How much of the revenue decline is due to pricing? - The revenue decline is primarily due to program delays and cancellations, not pricing issues [100]

Financial Data and Key Metrics Changes - The fourth quarter net sales were $257.1 million, a decrease of 7% year-over-year but an increase of 7% sequentially from the third quarter [35][36] - The full year fiscal 2025 net sales were $1.048 billion, down 6% from $1.115 billion in fiscal 2024, primarily due to program roll-offs [45] - The fourth quarter adjusted loss from operations was $21.6 million, a decrease of $11.8 million from fiscal 2024 [36] - Fourth quarter adjusted EBITDA was a negative $7.1 million, down $12.4 million year-over-year [39] - Free cash flow for the fourth quarter was $26.3 million, an increase of $10.5 million from fiscal 2024 [42] Business Line Data and Key Metrics Changes - Record sales for power products in data center applications exceeded $80 million for the full year, nearly double that of fiscal 2024 [14][45] - EV sales represented 20% of consolidated total sales, showing a year-over-year increase of 1419%, but a sequential decrease of approximately 10% from Q3 [16] - The automotive segment faced significant challenges, with historical warranty and quality issues contributing to losses [13][41] Market Data and Key Metrics Changes - The company expects a 10% to 15% decline in EV sales for fiscal 2026 due to weaker market demand and program delays [17] - The company anticipates a significant rebound in EV sales in fiscal 2027 based on customer forecasts and industry projections [17] Company Strategy and Development Direction - The company is focused on improving operational execution and successfully launching a large pipeline of new programs, with 30 new program launches expected in fiscal 2026 [20][49] - The transformation strategy aims to enhance operational efficiency and drive innovation, particularly in data centers and EV markets [30][31] - The company plans to optimize its footprint and reevaluate its product portfolio to align with market opportunities [29][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that fiscal 2026 will be a reset year due to EV program delays, particularly from Stellantis, but expects to double EBITDA despite declining sales [11][12] - The leadership team emphasized the importance of maintaining discipline and focus on objectives amid external challenges such as tariffs and market volatility [24][25] Other Important Information - The company has successfully remediated three material weaknesses in internal controls identified in fiscal 2024 [51] - The dividend was reduced to $0.07 per share to provide flexibility and align with peers, considering the company's financial situation [104] Q&A Session Summary Question: What are the key earnings levers given the expected sales decline? - Management highlighted operational improvements and the elimination of one-time expenses as key factors for expected EBITDA growth despite lower sales [54][58] Question: How many of the new launches are EV platforms? - Approximately 50% of the new program launches are related to the EV market, with a significant focus on data center growth as well [79] Question: Can you clarify the leverage waiver and covenant levels? - The leverage covenants were relaxed, starting at 4.25 for Q4 of fiscal 2025, with confidence in meeting these covenants over the next year [66][67]

Group 1: Methode Electronics - Methode Electronics reported a fourth-quarter adjusted EPS loss of 77 cents per share, missing market estimates of earnings of 4 cents per share [1] - The company's sales were $257.10 million, exceeding estimates of $232.87 million [1] - Shares of Methode Electronics fell sharply in pre-market trading following the earnings report [1] Group 2: Other Stocks - Mereo BioPharma Group plc shares tumbled 36.6% to $1.87 in pre-market trading [4] - Ultragenyx Pharmaceutical Inc. shares dipped 21.3% to $32.50 in pre-market trading [4] - Wolfspeed, Inc. shares fell 11% to $1.79 in pre-market trading after a 20% drop on Wednesday [4] - Scage Future shares fell 10.5% to $5.89 in pre-market trading after a significant gain of over 56% on Wednesday [4] - Altimmune, Inc. shares dipped 8.4% to $4.34 in pre-market trading following the initiation of a Phase 2 trial [4] - Bitmine Immersion Technologies, Inc. shares fell 7.7% to $61.60 in pre-market trading after a 40% drop on Wednesday due to a mixed shelf filing [4] - Hotel101 Global Holdings Corp. shares dipped 5.3% to $3.42 in after-hours trading [4] - Metsera, Inc. shares fell 4.3% to $33.80 in pre-market trading after a 17% gain on Wednesday [4]

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 |