Core Insights - Methode Electronics reported a net sales of $239.9 million for Q3 fiscal 2025, a decrease from $259.5 million in the same quarter of fiscal 2024, primarily due to lower automotive segment volumes [4][6] - The company experienced a net loss of $14.4 million or $0.41 per diluted share, compared to a net loss of $11.6 million or $0.33 per diluted share in the same quarter of the previous year [6][7] - Despite challenges in the automotive market, Methode reaffirmed its guidance for profitable organic sales growth in fiscal 2026 based on customer forecasts [3][11] Financial Performance - Net sales decreased by $19.6 million year-over-year, with a notable drop in the Automotive segment, which was partially offset by higher sales in the Industrial segment driven by power products for data centers [4][6] - Gross profit increased to $41.3 million from $37.0 million in the prior year, attributed to improved operational execution and product sales mix [5][25] - The adjusted loss from operations improved to $1.3 million from $2.9 million in the same quarter of fiscal 2024, excluding transformation costs [5][7] Cash Flow and Debt - The company generated positive free cash flow of $19.6 million, an increase from $12.2 million in the same quarter of fiscal 2024, due to proactive management of accounts receivable and inventory levels [10][36] - Total debt at the end of the quarter was $327.9 million, down from $330.9 million at the end of fiscal 2024, with net debt increasing to $224.1 million from $169.4 million [9][36] Segment Performance - The Automotive segment reported net sales of $115.7 million, down 17.2% from $139.7 million, primarily due to lower volumes related to EV lighting program roll-offs [13] - The Industrial segment saw an increase in net sales to $111.9 million, up 4.5% driven by demand for power distribution products for data centers [13] - The Interface segment's net sales slightly decreased to $12.3 million, with an increase in income from operations attributed to product sales mix [13] Management Strategy - The company is in the process of launching 53 new programs over two years, with 20 already launched this fiscal year and 33 more expected in the next five quarters [3][11] - Management emphasized a focus on cost control and operational metrics, alongside rebuilding the executive team with experienced leaders [3][11]

Core Insights - Methode Electronics, Inc. has appointed Brad Corrodi as Chief Strategy Officer effective March 10, 2025, bringing over 30 years of strategic, investment, and operational experience to the company [1][2][3] - The appointment is part of Methode's efforts to reshape its future, focusing on organic growth opportunities and potential M&A activities, particularly in expanding its power solutions enterprise into new markets [2][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, specializing in mechatronic products for OEMs [4][5] - The company serves various end markets, including transportation, cloud computing infrastructure, construction equipment, and consumer appliances, and is organized into segments: Automotive, Industrial, and Interface [5]

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] Upcoming Financial Results - The company will release its third quarter fiscal 2025 results for the period ended February 1, 2025, on March 5, 2025, after market close [1] - A conference call and webcast will be held on March 6, 2025, at 10:00 a.m. CST to review financial and operational highlights [2] Participation Details - To participate in the conference call, interested parties should dial 888-506-0062 (domestic) or 973-528-0011 (international) at least five minutes prior to the start [3] - A simultaneous webcast can be accessed through the company's website on the Investors page [3] Replay Information - A replay of the teleconference will be available shortly after the call through March 20, 2025, by dialing 877-481-4010 with passcode 52027 [4] - A webcast replay will also be available on the company's website on the Investors page [4]

Core Viewpoint - Kuehn Law is investigating potential breaches of fiduciary duties by certain officers and directors of Methode Electronics, Inc. related to misrepresentation and failure to disclose critical operational issues [1][2]. Group 1: Operational Issues - Methode Electronics lost skilled employees during the COVID-19 pandemic, which hindered the company's transition to a high mix, low volume production model at its Monterrey facility [2]. - The company's efforts to diversify from General Motors center consoles to specialized EV products faced multiple challenges, including planning issues, inventory shortages, supplier problems, and poor execution [2]. - The Monterrey facility experienced logistical defects in its manufacturing systems, including coding errors, shipping mistakes, delivery delays, and quality control issues [2]. Group 2: Financial Performance - Deadlines for launching new EV programs were missed, which resulted in delayed revenue for Methode Electronics [2]. - As a consequence of the operational challenges, Methode Electronics is not on track to meet its 2023 earnings-per-share guidance or the projected 6% organic sales growth rate [2].

Core Points - Methode Electronics, Inc. has appointed Karen Keegans as the new Chief Human Resources Officer (CHRO), effective February 3, 2025, succeeding Andrea Barry who held the position since 2017 [1][3] - Karen Keegans brings over 30 years of leadership experience in human resources, having served as CHRO for several Fortune 500 companies including Rockwell Automation, Pentair, and Praxair [2][4] - The appointment is part of Methode's strategy to transform the business and align its culture and talent with business objectives, aiming to regain a leadership position in the industry [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 [5] - The company designs, engineers, and produces mechatronic products for original equipment manufacturers (OEMs), focusing on user interface, lighting systems, power distribution, and sensor applications [5] - Methode's solutions serve various end markets, including transportation (automotive, commercial vehicle, aerospace), cloud computing infrastructure, construction equipment, and consumer appliances, managed through segments such as Automotive, Industrial, and Interface [6]

Core Viewpoint - Methode Electronics, Inc. has declared a quarterly dividend of $0.14 per share, payable on January 31, 2025, to stockholders of record as of January 17, 2025 [1]. 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 [2]. - The company designs, engineers, and produces mechatronic products for OEMs, utilizing a broad range of technologies for user interface, lighting systems, power distribution, and sensor applications [2]. Market Segments - The solutions provided by Methode Electronics 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].

Financial Data and Key Metrics - Q2 2025 sales were $293 million, with adjusted pretax income of $9 million, benefiting from an extra week in the fiscal year [8] - Sales increased by 2% year-over-year to $292.6 million, with a 13% sequential increase from Q1 2025 [24] - Adjusted income from operations was $14.3 million, up $8.3 million year-over-year and $19 million sequentially [26] - Adjusted EBITDA was $26.7 million, up $5.5 million year-over-year and $16.9 million sequentially [27] - Adjusted pretax income was $6.2 million, up $3.8 million year-over-year and $15.3 million sequentially [28] - Adjusted diluted EPS increased to $0.14 from $0.06 year-over-year and $0.45 sequentially [29] - Net cash from operating activities was negative $48 million, primarily due to a timing issue with accounts payable [32] Business Line Performance - EV sales accounted for 20% of total sales, up from 18% in Q1 2025, with expectations to exceed 20% for the full fiscal year [11] - Power Products sales into data centers grew both year-over-year and sequentially, contributing to overall sales growth [25] - Lighting business faced headwinds due to weak demand in the commercial vehicle market [8][25] Market Performance - Data center market showed strong growth, with sales up 50% year-over-year, representing 3%-5% of total sales [42] - EV market softened in North America, but new program launches helped mitigate the impact [11] - Commercial vehicle market weakness continued to affect the lighting business [8][25] Company Strategy and Industry Competition - The company is focused on executing over 30 program launches in fiscal 2025 and 20-plus in fiscal 2026, primarily in EV, traditional auto, and defense sectors [13][14] - A "One Methode" mindset is being reinvigorated to align global teams, with key executive appointments to strengthen leadership [15][16][17] - The company is investing in compliance resources and processes following an SEC subpoena [20] Management Commentary on Operating Environment and Future Outlook - Management highlighted tailwinds from data center growth and headwinds from automotive and commercial vehicle demand [11][18] - The company expects flat sales for fiscal 2025 but raised adjusted pretax income guidance to approximately breakeven [20] - Q3 is historically the weakest quarter due to holidays and customer shutdowns, with potential for a pretax loss [34] Other Important Information - The company ended the quarter with $97 million in cash, down $64.5 million, due to elevated program launch activity and inventory investment [31] - Free cash flow was negative $58.4 million, primarily due to the accounts payable timing issue [32] - The company is reaffirming fiscal 2026 guidance for higher sales and positive pretax income compared to fiscal 2025 [34] Q&A Session Summary Question: Impact of the extra week on revenue and operating results - The extra week contributed approximately $20 million in revenue and corresponding operating results [38] Question: Cost control measures beyond freight cost reduction - Overhead thinning and improved scrap activities contributed to operating income improvement [40] Question: New orders related to EV market - The majority of new orders were related to EV and power programs [41] Question: Data center market growth - Data center sales grew 50% year-over-year, representing 3%-5% of total sales, with above-average margins [42] Question: Pretax income outlook for Q3 - Q3 is expected to be challenging due to seasonal factors, but no one-off positive impacts were noted in Q2 [47] Question: Program launch status and geographic risks - Many launches are in final development or ramp-up phases, with potential delays in EV program starts, particularly in Europe and North America [49] Question: Stellantis program updates - Stellantis remains a key customer, with some timing shifts in EV launches, but the company is not overly exposed to Stellantis or the EV market [51] Question: Data center segment breakdown and AI impact - Data center growth is driven by both AI and core data center demand, with opportunities to expand capabilities in this space [53] Question: Interest expense and inventory reserve reversal - Interest expense is expected to remain at $6.2 million per quarter, with a $0.5 million inventory reserve reversal in the Interface segment [59][60] Question: Premium freight cost normalization - Premium freight costs are not yet normalized, with a $7 million reduction quarter-over-quarter, and further improvements expected [61] Question: New business sources beyond Stellantis - New business is balanced between European, North American, and Japanese OEMs, with launches split between Europe and North America [63] Question: EV market projections and sales determination - The company uses customer data, third-party forecasts, and internal expertise to validate EV sales projections, considering regional market penetration [66][67] Question: Commercial vehicle market assumptions - Commercial vehicle market assumptions remain unchanged, with a focus on deepening customer relationships [70] Question: Operations improvement in Mexico - Operations in Mexico have transitioned from fixing issues to improving processes, with significant premium freight cost reductions [73] Question: CapEx reduction and timing changes - CapEx reduction is due to both lower required spending and timing changes based on customer program needs [74] Question: Cash outflow reversal expectations - The company expects to reverse some of the cash outflow in the next two quarters, approaching neutral cash flow by year-end [75]

Methode Electronics, Inc. Earnings Presentation Second Quarter Fiscal 2025 December 5, 2024 2 Forward-Looking Statements This presentation 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 resul ...

Core Viewpoint - Methode (MEI) reported quarterly earnings of $0.14 per share, significantly exceeding the Zacks Consensus Estimate of a loss of $0.17 per share, and showing an improvement from earnings of $0.06 per share a year ago [1][3] Financial Performance - The earnings surprise for the quarter was 182.35%, compared to a previous expectation of a loss of $0.28 per share, where the actual loss was $0.31, resulting in a surprise of -10.71% [2] - Methode's revenues for the quarter ended October 2024 were $292.6 million, surpassing the Zacks Consensus Estimate by 10.47%, and showing an increase from $288 million in the same quarter last year [3] - Over the last four quarters, Methode has exceeded consensus revenue estimates two times [3] Stock Performance - Methode shares have declined approximately 48.9% since the beginning of the year, contrasting with the S&P 500's gain of 27.6% [5] - The current Zacks Rank for Methode is 4 (Sell), indicating expectations of underperformance in the near future [8] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is -$0.10 on revenues of $260.55 million, and for the current fiscal year, it is -$0.47 on revenues of $1.07 billion [9] - The trend of estimate revisions for Methode has been unfavorable leading up to the earnings release [8] Industry Context - The Electronics - Connectors industry, to which Methode belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable industry outlook [10]

Financial Performance - Net sales for the second quarter of fiscal 2025 were $292.6 million, an increase from $288.0 million in the same quarter of fiscal 2024, driven by higher volume for power distribution products[5]. - Pre-tax income was $1.6 million, with adjusted pre-tax income at $6.2 million, compared to a loss of $51.3 million in the same quarter of fiscal 2024[3][6]. - The net loss was $1.6 million, or $0.05 per diluted share, significantly improved from a net loss of $55.3 million, or $1.55 per diluted share, in the same quarter of fiscal 2024[7]. - Adjusted net income was $5.2 million, or $0.14 per diluted share, up from $2.4 million, or $0.06 per diluted share, in the same quarter of fiscal 2024[7]. - EBITDA for the quarter was $22.1 million, compared to a negative $36.7 million in the same quarter of fiscal 2024, with adjusted EBITDA at $26.7 million[8]. - Gross profit for the quarter was $57.9 million, compared to $52.3 million in the same quarter last year, reflecting a gross margin improvement[29]. - The company reported a net loss of $1.6 million for the quarter, a significant improvement from a net loss of $55.3 million in the prior year[29]. - Free cash flow for the three months ended November 2, 2024, was $(58.4) million, compared to $(11.3) million for the same period last year[35]. - The company reported a diluted loss per share of $(1.55) for the three months ended November 2, 2024[40]. - Pre-tax loss income for the three months ended November 2, 2024, was $(55.5) million[40]. Segment Performance - The Automotive segment reported net sales of $145.5 million, down 5.7% from $154.3 million, primarily due to lower volume in Asia[11]. - The Industrial segment's net sales increased by 9.1% to $131.4 million, driven by higher demand for power distribution products for data centers[12]. - The Interface segment's net sales rose to $15.7 million, up from $11.7 million, attributed to higher volume of transceivers and touch panels[13]. Guidance and Future Plans - The company raised its adjusted pre-tax income guidance for fiscal 2025 to approximately breakeven, while reaffirming net sales expectations similar to fiscal 2024[14]. - The company plans to continue focusing on cost reduction initiatives to improve profitability moving forward[34]. - The company plans to focus on market expansion and new product development in the upcoming quarters[39]. Balance Sheet and Cash Flow - Cash and cash equivalents decreased to $97.0 million as of November 2, 2024, down from $161.5 million at the end of the previous reporting period[31]. - Total assets decreased to $1,375.1 million from $1,403.5 million, indicating a reduction in overall asset base[31]. - Total liabilities remained relatively stable at $636.8 million compared to $637.5 million in the previous period[31]. - The company incurred $42.6 million in selling and administrative expenses for the quarter, up from $40.9 million in the same quarter last year[29]. - The company’s long-term debt increased to $340.4 million from $330.7 million, indicating a rise in financial leverage[31]. - Net debt as of November 2, 2024, was $243.6 million, up from $169.4 million at the end of the previous year[37]. - Total debt increased to $340.6 million, while cash and cash equivalents decreased to $(97.0) million[37]. - The company incurred transformation costs of $4.8 million for the three months ended November 2, 2024[36]. - Goodwill impairment charges were $56.5 million for the three months ended October 28, 2023[36].