Methode Electronics(MEI) - 2026 Q2 - Quarterly Results

Financial Performance - Net sales for Q2 fiscal 2026 were $246.9 million, a decrease of 15.6% year-over-year from $292.6 million in Q2 fiscal 2025[3] - Income from operations was $2.9 million, down from $9.4 million in the same quarter of fiscal 2025, representing 1.2% of net sales compared to 3.2%[4] - Net loss was $9.9 million or $0.28 per diluted share, compared to a loss of $1.6 million or $0.05 per diluted share in Q2 fiscal 2025[5] - Adjusted EBITDA was $17.6 million, down from $26.7 million in Q2 fiscal 2025, with an adjusted EBITDA margin of 7.1%[6] - Net loss for the six months ended November 1, 2025, was $20.2 million, compared to a net loss of $19.9 million for the same period in the previous year[26] - Adjusted EBITDA for the six months ended November 1, 2025, was $33.3 million, down from $36.5 million in the prior year, representing a decrease of 8.8%[28] - The net loss for the three months ended November 1, 2025, was $9.9 million, resulting in a diluted loss per share of $0.28, compared to a net loss of $1.6 million and a diluted loss per share of $0.05 in the prior year[31] - For the six months ended November 1, 2025, the company reported a net loss of $20.2 million, with a diluted loss per share of $0.57, compared to a net loss of $19.9 million and a diluted loss per share of $0.56 in the same period last year[31] Cash Flow and Debt - Free cash flow for the first half of fiscal 2026 was positive $6.4 million, compared to negative $58.4 million in the same period of fiscal 2025[8] - Free cash flow for the six months ended November 1, 2025, was $6.4 million, compared to a negative free cash flow of $61.1 million for the same period last year[29] - Debt increased to $332.5 million at the end of the quarter, up from $317.6 million at the end of fiscal 2025[7] - Long-term debt increased from $317.4 million to $332.3 million, an increase of 4.5%[24] Segment Performance - The Automotive segment reported a 24.1% decrease in net sales to $110.5 million, primarily due to the roll-off of legacy programs[10] - The Industrial segment saw a 3.4% decrease in net sales to $126.9 million, impacted by lower sales volumes for certain products[10] Operational Challenges and Restructuring - The company is focused on strategic operational enhancements despite a projected $100 million decline in annual net sales due to evolving EV market demand[2] - Transformation costs for the three months ended November 1, 2025, were $4.8 million, while for the six months, they totaled $7.0 million, indicating significant ongoing restructuring efforts[31] - The company continues to face challenges in its operational performance, as indicated by the significant losses and restructuring costs reported[31] Asset and Equity Changes - Total assets decreased from $1,305.8 million to $1,287.4 million, a decline of 1.6%[24] - Total shareholders' equity decreased from $693.3 million to $679.3 million, a decline of 2.0%[24] - Total current liabilities decreased from $233.2 million to $217.6 million, a reduction of 6.5%[24] Other Financial Metrics - Cash and cash equivalents increased to $118.5 million from $103.6 million, reflecting a rise of 14.9%[26] - Inventory obsolescence expense decreased from $5.6 million to $3.4 million, a decline of 39.3%[26] - The company reported a net cash provided by operating activities of $17.7 million, compared to a net cash used of $37.1 million in the prior year[26] - The company recognized a valuation allowance on deferred tax assets of $2.3 million for the three months ended November 1, 2025, compared to $3.2 million in the prior year[31] - The company incurred restructuring costs and asset impairment charges of $1.1 million for the three months ended November 1, 2025, compared to $0.1 million in the same period last year[31] - The net gain on the sale of non-core assets was $0 for the three months ended November 1, 2025, compared to a loss of $0.3 million in the prior year[31] - The company reported a partial write-off of unamortized debt issuance costs of $0.6 million for the six months ended November 1, 2025[31] - Adjusted non-U.S. GAAP income for the three months ended November 1, 2025, was $4.0 million, with a diluted loss per share of $0.19, compared to $14.3 million and a diluted income per share of $0.14 in the previous year[31]