Methode Electronics 2025 Q4 Earnings Improved Net Income by 50.6%

Methode Electronics (MEI) reported its fiscal 2025 Q4 earnings on July 9th, 2025. Despite a 7.3% decline in total revenue to $257.10 million compared to the previous year, the company showed significant improvement in net income, narrowing its losses considerably. Methode Electronics' strategic focus on data center power products paid off, achieving record sales of over $80 million. Looking ahead, the company projects a continued transformation, with anticipated EBITDA growth, despite challenges in the automotive segment, particularly from reduced EV demand.

Revenue

The total revenue of Methode Electronics decreased by 7.3% to $257.10 million in 2025 Q4, down from $277.30 million in 2024 Q4.

Earnings/Net Income

Methode Electronics narrowed losses to $0.79 per share in 2025 Q4 from a loss of $1.62 per share in 2024 Q4, marking a 51.3% improvement. The net loss reduced to $-28.30 million from $-57.30 million the previous year, indicating a significant operational improvement. The EPS improvement suggests positive financial momentum.

Post-Earnings Price Action Review

The strategy of buying Methode Electronics shares following a revenue increase on the financial report release date and holding for 30 days has underperformed over the past three years. This approach resulted in a -65.73% return, lagging behind the benchmark's 90.92% return, with an excess return of -156.64%. The compounded annual growth rate (CAGR) stood at -19.43%, reflecting considerable losses. Furthermore, the strategy exhibited a high maximum drawdown of -89.34%, coupled with a Sharpe ratio of -0.39, indicating significant risk. These statistics highlight the need for caution and evaluation of the strategy's effectiveness in achieving returns.

CEO Commentary

Jon DeGaynor, President and CEO, emphasized the progress in Methode's transformation journey, focusing on execution to enhance long-term value. The company achieved record sales in data center power products, finishing the year with over $80 million in sales. However, challenges arose from reduced demand from a major EV customer and inventory write-downs due to program changes. Despite these hurdles, DeGaynor highlighted the company’s robust free cash flow and debt reduction efforts. He indicated a commitment to rebuilding the company’s foundation and strategic actions, including adjusting the board and headquarters, while pivoting resources towards data center growth.

Guidance

Looking ahead to fiscal 2026, Methode Electronics expects to double its EBITDA despite anticipating an approximate $100 million decline in sales primarily due to lower EV demand, particularly from Stellantis. DeGaynor reiterated the company's belief in the EV megatrend while indicating a strategic shift to leverage growth opportunities in data centers as they adapt to current market conditions.

Additional News

Methode Electronics has announced a quarterly dividend of $0.07 per share, payable on August 1, 2025, reflecting the company's commitment to shareholder returns amid financial prudence. Additionally, corporate restructuring efforts are underway, including a reduction in board size from ten to seven directors and relocation of headquarters to an existing facility. These strategic changes aim to streamline operations and enhance organizational efficiency as Methode Electronics continues its transformation journey.