Methode Electronics (MEI) investor relations material

Executive summary

• Net sales rose 10.4% year-over-year to $265.4 million, driven by strong industrial segment volumes, especially in data center-related sales, while Interface segment declined due to divestitures and program roll-offs.

• Adjusted EBITDA was $13.7 million, down from $15.7 million year-over-year, reflecting temporary margin pressure from one-time expenses and investments in talent and capabilities.

• Net loss widened to $11.4 million from $10.3 million, impacted by higher selling and administrative expenses and increased income tax expense.

• Booked $75 million in new non-data center awards (~$400 million lifetime revenue), affirming a growing sales pipeline across segments.

• Transformation to a global operating model, leadership upgrades, and operational improvements, especially in Mexico, are driving improved alignment, supply chain execution, and service levels.

Financial highlights

• Gross profit increased to $47.7 million from $43.5 million year-over-year, with gross margin stable at 18.0% of net sales.

• Adjusted net loss was $7.7 million ($0.22 per diluted share), nearly flat year-over-year.

• Free cash flow was an outflow of $10.9 million, compared to an inflow of $18 million, mainly due to higher working capital for inventory build supporting production transition.

• Cash and cash equivalents were $116.2 million at quarter end; net debt increased to $194.3 million due to lower cash.

• Operating loss was $3.9 million, compared to operating income of $1.1 million prior year.

Outlook and guidance

• Fiscal 2027 guidance reaffirmed: net sales of $1.025–$1.075 billion and adjusted EBITDA of $72–$82 million (margin of 7–7.6%), with capex guidance of $25–$30 million.

• Free cash flow expected to be comparable to fiscal 2026.

• Guidance reflects expectations for data center growth, operational improvements in Mexico, and improving commercial vehicle demand, but is subject to risks including trade, geopolitical instability, and supply chain disruptions.

• Management expects continued volatility due to global trade tensions, supply chain disruptions, and slower-than-expected EV adoption.

• Liquidity is expected to be sufficient for at least the next twelve months, but risks remain if adverse conditions persist.