Methode Electronics(MEI) - 2025 Q4 - Annual Results

Financial Performance Overview 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 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] - Experienced significant challenges, including a ramp-down in demand from a major EV customer and inventory write-downs for canceled or delayed programs[3] - Achieved record sales for data center power products, finishing the year at over $80 million[3] - Generated strong free cash flow for the second consecutive quarter, enabling debt reduction[3] - Corporate actions include reducing the board size, relocating headquarters, reducing the dividend, and continuing a portfolio review[5] - For fiscal 2026, the company expects to double its EBITDA despite an anticipated $100 million sales decline due to lower EV demand[5] Fourth Quarter Fiscal 2025 Performance 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][4] - 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][10] Full Year Fiscal 2025 Performance 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] - 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] Segment Performance (Q4 2025) 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 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] Industrial Segment 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] Interface Segment 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 The company announced a reduced quarterly dividend and provided its financial guidance for fiscal year 2026 Dividend Announcement 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] Fiscal 2026 Guidance 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] - Guidance is subject to risks including tariffs, EV program take rates, cost recovery actions, inflation, and supply chain disruptions[19] Consolidated Financial Statements (Unaudited) This section provides the unaudited consolidated statements of operations, balance sheets, and cash flows for fiscal year 2025 Consolidated Statements of Operations 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 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 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 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 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 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) |