Methode Electronics (MEI) 2025 Conference August 12, 2025 12:40 PM ET Speaker0Once again, I'm Ryan Brinkman at JPMorgan and The U. S. Automotive Equity Research Analyst here. Thanks for joining us for the next presentation. We have John DeGaener, Methode Electronics, relatively new President and Chief Executive Officer and Rob Jerry, their Vice President of Investor Relations.I'm going to turn it over to John for some remarks, and then we'll engage in a fireside chat. Thank you. Great.Speaker1Thanks, Ryan, ...

Core Insights - The company reported a slight decline in sales of 0.4% year-on-year, with total sales reaching €13,477 million in H1 2025 compared to €13,534 million in H1 2024, while organic growth was positive at 1.1% [3][10][30] - Adjusted EBITDA increased by 7.8% to €1,762 million, with the operating margin improving by 20 basis points to 5.4% of sales, driven by strict cost control and operational improvements [3][8][14] - The net cash flow more than doubled to €418 million, reflecting a significant improvement in cash management and operational efficiency [3][25][26] - The company confirmed its full-year guidance for 2025, maintaining targets for sales, operating margin, net cash flow, and leverage [4][38] Financial Performance - Sales for H1 2025 were €13,477 million, a decrease of 0.4% from H1 2024, with organic growth of 1.1% [3][10] - Adjusted EBITDA rose to €1,762 million, up 7.8% from €1,635 million in H1 2024, representing 13.1% of sales [3][24] - Operating income increased by 3.1% to €722 million, with an operating margin of 5.4% [3][14] - The net result for the group was a loss of €269 million, primarily due to non-cash depreciation related to the SYMBIO joint venture [3][17] Cost Management and Transformation - The company is undergoing a significant organizational transformation aimed at enhancing accountability and operational excellence, with a focus on a division-centric structure [4][7][34] - The SIMPLIFY project aims to streamline operations and reduce costs, targeting a €110 million reduction in the cost base by 2028 [9][36] - Strict cost and cash discipline has been a key driver of improvement, with a notable reduction in capital expenditures and capitalized R&D [8][30] Market and Operational Context - Global automotive production increased by 3.1% in H1 2025, but the company faced a challenging geographic mix, particularly in EMEA and the Americas [12][51] - The company recorded order intake of €14 billion in H1 2025, down from €15 billion in H1 2024, attributed to delayed tenders in North America [37] - The company anticipates a volatile production environment in H2 2025, with a projected automotive market production of 45 million light vehicles [38][39] Strategic Initiatives - The company is actively reviewing its business portfolio to prioritize leadership positions and streamline operations, including potential asset disposals [10][31] - The EU-FORWARD program is expected to yield further savings and operational improvements, contributing to the company's financial targets [8][38] - The company aims to reduce its net debt/Adjusted EBITDA ratio below 1.5x by 2026, supported by ongoing disposals and operational efficiencies [38][39]

Company Performance & Financials - United Rentals reported $3943 billion in total revenue for Q2 2025, a 45% year-over-year increase[166] - The company's adjusted EBITDA for Q2 2025 was $1810 billion, with a margin of 459%[166] - United Rentals' fleet productivity for Q2 2025 was 33%[161] - The company's year-to-date free cash flow reached $1201 billion, excluding merger and restructuring payments[166] - United Rentals anticipates total revenue between $158 billion and $161 billion for 2025[171] Specialty Business & Digitalization - Specialty revenue represented approximately 33% of United Rentals' total revenue in 2024[63] - United Rentals' digital marketplace saw a 22% year-over-year increase in revenue[66] - 76% of United Rentals' revenue is influenced by digital channels, up from 70% in 2023[69] Sustainability & Governance - United Rentals aims to reduce greenhouse gas (GHG) emissions intensity by 35% by 2030, compared to a 2018 baseline[188] - As of the end of 2024, 91% of North American locations had completed lighting retrofits, working towards an aspirational goal of 95% by 2025[188]

Industry Overview - The United States' home-furnishing market is experiencing a setback due to reduced consumer confidence, high mortgage rates, lingering inflation risks, and concerns regarding new tariff implementations [1] - Despite these challenges, companies like RH and Williams-Sonoma are managing to sustain business growth through diversified strategies [1] Company Profiles RH - RH is a leading luxury retailer in home furnishings with a market cap of approximately $3.88 billion, offering a wide range of products including furniture, lighting, textiles, and décor [2][4] - The company is benefiting from global expansion, with significant demand growth of 60% in RH Munich and RH Dusseldorf during Q1 of fiscal 2025 [4] - RH plans to open seven Design galleries in 2025 and aims for long-term expansion of 7-9 new galleries annually [5] - To mitigate tariff-related uncertainties, RH is shifting sourcing out of China, projecting a reduction from 16% to 2% by Q4 of fiscal 2025 [6] Williams-Sonoma - Williams-Sonoma, with a market cap of about $21.3 billion, is a multi-channel specialty retailer of premium home products and is one of the largest e-commerce retailers in the U.S. [2][7] - The company reported a 6.2% increase in retail and a 2.1% increase in e-commerce comparable sales year-over-year in Q1 of fiscal 2025 [7] - Williams-Sonoma is investing between $250 million and $275 million in fiscal 2025, with 85% dedicated to enhancing e-commerce and supply-chain efficiency [7] - The B2B segment of Williams-Sonoma grew by 8% year-over-year in Q1 of fiscal 2025, indicating successful market capture [9] Financial Performance - RH is projected to achieve 99.6% EPS growth in fiscal 2025, while Williams-Sonoma's EPS is expected to decline by 3% [8] - RH's stock is trading at a discount compared to Williams-Sonoma, suggesting stronger growth potential amid uncertain housing demand [8][13] - The Zacks Consensus Estimate for RH's fiscal 2025 earnings is $10.76 per share, indicating significant growth potential [16] - In contrast, Williams-Sonoma's fiscal 2025 earnings estimate remains at $8.53 per share, reflecting a decline [18] Strategic Initiatives - RH's global expansion efforts and product platform enhancements are driving positive demand trends, particularly in Europe [4][5] - Williams-Sonoma's strategic initiatives are yielding positive results in key markets, including Canada, Mexico, and India, with plans for further expansion [10] - Both companies are navigating macroeconomic pressures, with Williams-Sonoma facing challenges from new tariff regulations and ongoing inflation [11] Investment Outlook - RH stock is viewed as a high-growth option at a discounted valuation, making it attractive for investors seeking growth amid market risks [19] - Williams-Sonoma, while showing long-term growth potential, faces challenges due to market uncertainties and a current premium valuation [19][20] - Both stocks currently carry a Zacks Rank 3 (Hold), but RH is perceived to offer better upside potential for growth-oriented investors [20]

Company Overview - RH is a leading luxury retailer in the home furnishing space, offering a wide range of merchandise including furniture, lighting, textiles, bathware, décor, outdoor and garden items, tableware, and furnishings for children and teens [11] Investment Ratings - RH currently holds a Zacks Rank of 3 (Hold) and has a VGM Score of B, indicating a moderate investment outlook [11] - The company has a Value Style Score of B, supported by attractive valuation metrics such as a forward P/E ratio of 16.81, which may appeal to value investors [12] Earnings Estimates - In the last 60 days, three analysts have revised their earnings estimates higher for fiscal 2026, with the Zacks Consensus Estimate increasing by $0.21 to $10.87 per share [12] - RH has demonstrated an average earnings surprise of 57.6%, suggesting potential for positive performance relative to expectations [12] Investment Considerations - With a solid Zacks Rank and strong Value and VGM Style Scores, RH is recommended for investors looking for potential opportunities in the luxury home furnishing sector [12]

Group 1 - RH is under investigation for potential violations of federal securities laws, as announced by Bleichmar Fonti & Auld LLP [1] - RH operates primarily in the home furnishings market, offering a variety of products including furniture, lighting, textiles, and outdoor furnishings [2] - Despite claims of accelerated demand, RH was actually facing softening demand and macroeconomic challenges that necessitated delays in new collections [3] Group 2 - On April 2, 2025, RH reported disappointing earnings for FY 2024, citing softening demand and excess inventory estimated between $200 million to $300 million [4] - Following the earnings report, RH's stock price plummeted by 40%, dropping from $249.35 to $149.39 per share within a day [4]

Group 1: Investigation Overview - Bleichmar Fonti & Auld LLP is investigating RH for potential violations of federal securities laws [1] - RH is a luxury lifestyle brand primarily in the home furnishings market, offering a variety of products including furniture and décor [2] Group 2: Company Performance and Market Conditions - During the relevant period, RH claimed accelerated demand despite challenging housing market conditions and indicated a higher level of inventory for downside protection [3] - However, RH was actually experiencing softening demand and macroeconomic challenges that necessitated delays in new collections [3] Group 3: Stock Market Reaction - On April 2, 2025, RH reported disappointing earnings for FY 2024, citing softening demand, an uncertain macroeconomic environment, and excess inventory valued at $200 to $300 million [4] - Following this announcement, RH's stock price plummeted by 40%, dropping from $249.35 per share to $149.39 per share within a day [4]

Core Viewpoint - RH is under investigation for potential violations of federal securities laws, following a significant decline in stock price after disappointing earnings reports and revelations about softening demand and excess inventory [1][4]. Company Overview - RH operates as a retailer and luxury lifestyle brand primarily in the home furnishings market, offering a variety of products including furniture, lighting, textiles, and outdoor furnishings [2]. Recent Developments - During a challenging housing market, RH claimed to experience accelerated demand and planned to introduce new collections, but was actually facing softening demand and macroeconomic challenges that necessitated delays in product launches [3]. - On April 2, 2025, RH reported disappointing earnings for FY 2024, citing softening demand, an uncertain macroeconomic environment, and excess inventory valued between $200 million and $300 million [4]. Stock Performance - Following the earnings report, RH's stock price plummeted by 40%, dropping from $249.35 per share on April 2, 2025, to $149.39 per share on April 3, 2025, reflecting investor reaction to the negative news [4].

Group 1 - RH is under investigation for potential violations of federal securities laws, as announced by Bleichmar Fonti & Auld LLP [1] - RH operates primarily in the home furnishings market, offering a variety of products including furniture, lighting, textiles, and outdoor furnishings [2] - Despite claims of accelerated demand, RH was actually facing softening demand and macroeconomic challenges that necessitated delays in new collections [3] Group 2 - On April 2, 2025, RH reported disappointing earnings for FY 2024, citing softening demand and excess inventory valued between $200 million to $300 million [4] - Following the earnings report, RH's stock price plummeted by 40%, dropping from $249.35 to $149.39 per share within a day [4]