Methode Electronics 2026 Q2 Earnings Net Loss Widens 518.8% Despite Revenue Beat

Methode Electronics (MEI) reported Q2 2026 results showing a 15.6% revenue decline to $246.9 million but outperformed analyst estimates by $9.21 million. The company reaffirmed its full-year guidance for $900–$1 billion in sales and $70–$80 million in adjusted EBITDA, despite a $100 million sales shortfall linked to EV market shifts.

Revenue

Automotive sales led the revenue decline, dropping 24.1% to $110.5 million due to legacy program roll-offs and lower sensor/user interface demand. Industrial revenue fell 3.4% to $126.9 million, driven by weaker commercial vehicle lighting and remote control device sales. The Interface segment reported $9.5 million in revenue, down 40% from $15.7 million in the prior year, as appliance touch panel demand waned. Consolidated revenue totaled $246.9 million, with eliminations/corporate adjustments reducing the total by $18.8 million.

Earnings/Net Income

The company’s losses deepened significantly, with a net loss of $9.9 million ($0.28 per share), representing a 518.8% increase from the $1.6 million ($0.05 per share) loss in 2025 Q2. The non-GAAP loss of $0.19 per share narrowly beat expectations by $0.01. The deterioration in profitability was driven by lower sales volumes and operational margin pressures, particularly in the Automotive segment.

Price Action

Methode’s stock surged 29.12% month-to-date following the earnings report, contrasting with a post-earnings strategy that underperformed benchmarks.

Post-Earnings Price Action Review

The strategy of buying Methode shares after a revenue raise quarter-over-quarter and holding for 30 days delivered an 83.52% loss over three years, underperforming the 70.56% benchmark return. With an excess return of -154.08% and a CAGR of -45.43%, the approach highlighted the stock’s volatility and lack of alignment with broader market trends.

CEO Commentary

CEO Jon DeGaynor emphasized progress in operational transformation, citing resilience amid a $100 million annual sales decline. He reiterated confidence in free cash flow generation and operational reliability, while acknowledging challenges from EV market demand shifts and supply chain disruptions.

Guidance

Methode reaffirmed 2026 guidance: $900–$1 billion in sales and $70–$80 million in adjusted EBITDA. Risks include EV demand volatility, tariffs, and transformation costs. Free cash flow is expected to remain positive, though net income margin guidance was omitted due to foreign currency uncertainties.

Additional News

Methode’s Q2 non-GAAP EPS of -$0.19 beat estimates by $0.01, with revenue exceeding expectations by $9.21 million. Shares fell 5% post-earnings despite the revenue beat, as the wider-than-anticipated loss of $0.28 per share disappointed investors. The company also announced a conference call to discuss strategic initiatives, including operational enhancements and cost recovery efforts.