Methode Electronics (MEI) Q4 2026 earnings summary

Executive summary

• Fiscal 2026 net sales were $1,019.2 million, down 2.8% year-over-year, mainly due to auto program roll-offs, commercial vehicle market softness, and customer program delays.

• Adjusted EBITDA increased 60.5% to $68.2 million, driven by operational improvements, customer recoveries, and cost management.

• Transformation initiatives included leadership overhaul, portfolio simplification, and operational execution, positioning for sustainable long-term growth.

• Free cash flow improved to $16 million and net debt was reduced by 13% to $185.4 million.

• Q4 2026 net sales rose 15.9% to $298.1 million, with net income of $0.4 million, reversing a prior-year loss.

Financial highlights

• Q4 gross profit increased to $72.2 million from $19.6 million, and Q4 adjusted EBITDA was $26.9 million versus a $7.1 million loss last year.

• Fiscal 2026 adjusted net loss was $37.5 million ($1.07/share), an improvement from $39.7 million ($1.12/share) in the prior year.

• Free cash flow was $15.6 million, reversing a $15.2 million outflow in the prior year.

• Debt at year-end was $325.0 million, with net debt reduced to $185.4 million from $214.0 million.

• Fiscal 2026 gross margin improved to 19.8% from 15.6% in fiscal 2025.

Outlook and guidance

• Fiscal 2027 net sales expected between $1.025 billion and $1.075 billion, with adjusted EBITDA of $72–$82 million (7–7.6% margin).

• Excluding portfolio changes and customer recoveries, net sales are expected to grow 8% year-over-year, driven by $50 million incremental data center sales and improved commercial vehicle demand.

• Adjusted EBITDA projected to grow 13% (or 51% excluding one-time items), with margin expansion from operational improvements.

• Capital expenditures forecasted at $25–$30 million; continued focus on debt reduction and free cash flow generation.

• Profitability anticipated to improve faster than revenue as operational improvements and business mix benefits take hold.