Methode Electronics (MEI) Q2 2025 earnings summary

Executive summary

• Net sales for Q2 FY25 reached $292.6 million, up 2% year-over-year and 13% sequentially, with EV-related sales comprising 20% of total and strong data center demand offsetting automotive and commercial vehicle headwinds.

• Adjusted pre-tax income was $6.2 million, up from $2.4 million last year, with improved operational execution and cost controls.

• Over $50 million in annual program awards were secured, mainly in EV and power products, with a robust pipeline for future launches.

• Leadership changes include a new CFO and Senior VP of Global Automotive Business to drive transformation.

• Net loss narrowed to $1.6 million for the quarter, a significant improvement from the prior year, mainly due to the absence of goodwill impairment.

Financial highlights

• Net sales: $292.6 million for Q2 FY25, up from $288 million in Q2 FY24.

• Adjusted EBITDA: $26.7 million, up from $21.2 million year-over-year.

• Adjusted diluted EPS: $0.14, up from $0.06 last year.

• Free cash flow was negative $58.4 million, mainly due to timing of payments and elevated inventory for program launches.

• Cash and equivalents at period end: $97 million, down from $161.5 million at the start of the period.

Outlook and guidance

• Fiscal 2025 net sales expected to be flat versus FY24; adjusted pre-tax income guidance raised to approximately breakeven.

• Fiscal 2026 net sales expected to exceed FY25, with pre-tax income notably higher.

• CapEx guidance reduced to $45–$55 million; tax expense guidance increased to $13–$15 million.

• Q3 FY25 net sales expected to be similar to prior year; Q4 adjusted pre-tax income expected to be significantly stronger.

• Liquidity is expected to be sufficient for at least the next twelve months, barring prolonged economic disruptions.