Methode Electronics (MEI) Small-Cap Virtual Conference summary

Key messages and transformation progress

• Transformation initiatives are progressing, with improved operational execution and cost reductions driving results and a $9M increase in Q1 income from operations.

• Three consecutive quarters of strong free cash flow and net debt reduction achieved, supported by power product sales growth, especially in data centers.

• FY2026 guidance reaffirmed, expecting to double EBITDA despite a $100 million sales decline, reflecting confidence in ongoing strategies and team performance.

• Organizational changes, plant revamps, and executive team building have stabilized operations and improved customer satisfaction.

• Focus areas include automotive, industrial, and interface segments, with a global manufacturing footprint and cost-efficient presence in North America, Europe, Asia, and Africa.

Power solutions and market opportunities

• Power solutions sales have grown at a 30% CAGR since FY2022, driven by data center and EV demand, with high-voltage busbars and interconnect boards expected to drive further expansion.

• FY2026 power sales expected to moderate before reaccelerating in FY2027.

• Investments continue in advanced products for military, aerospace, and high-voltage data center applications.

• Uptick in RFQs and RFPs signals potential for future sales growth and customer diversification.

• Global footprint enables flexible production shifts and competitive advantage.

Financial performance and capital allocation

• Operational improvements led to $9 million reduction in SG&A and higher income from operations.

• Over $41 million in debt paid down in the last three quarters; three consecutive quarters of positive free cash flow.

• Targeting leverage ratio in the threes, with continued focus on deleveraging.

• FY2026 sales expected at $900M–$1B, with EBITDA of $70M–$80M and margin nearly doubling to 7.9%.

• Dividend reduced and board size cut to support capital discipline.