Methode Electronics 2026 Q2 Earnings Net Loss Widens 518.8% Amid Revenue Decline

Methode Electronics (MEI) reported a 15.6% revenue decline to $246.9M in Q2 2026, yet outperformed revenue estimates by $9.21M. The company reaffirmed its $900M–$1B sales and $70M–$80M adjusted EBITDA guidance for fiscal 2026, despite a 24.1% drop in Automotive segment sales and a 518.8% increase in net losses.

Revenue

Methode’s Q2 revenue of $246.9M reflects a 15.6% year-over-year decline, driven by reduced demand across all segments. The Automotive division led the downturn, with sales falling to $110.5M from $145.5M, primarily due to legacy program roll-offs and lower sensor/user interface product volumes. Industrial segment revenue dipped slightly to $126.9M, while the Interface segment saw a sharper decline to $9.5M from $15.7M, attributed to reduced appliance touch panel sales. Consolidated revenue was further adjusted for eliminations/corporate activities at -$18.8M.

Earnings/Net Income

The company’s net loss widened to $9.9M, or $0.28 per share, a 518.8% increase from $1.6M in the prior year. Adjusted EBITDA margin stood at 7.1%, with the EPS of -$0.28 marking a 460% wider loss compared to the prior year, signaling significant financial strain.

Post-Earnings Price Action Review

The strategy of buying Methode shares after a revenue increase quarter-over-quarter and holding for 30 days underperformed drastically. Over three years, the approach delivered an 83.52% loss, far below the benchmark return of 70.56%. The excess return was -154.08%, with a CAGR of -45.43%, highlighting a steep decline in value.

CEO Commentary

CEO Jon DeGaynor emphasized progress in Methode’s transformation, citing operational improvements and resilience amid challenges. He noted a $100M annual sales decline due to evolving EV market demand but reaffirmed fiscal 2026 guidance for $900M–$1B in sales and $70M–$80M in adjusted EBITDA. DeGaynor expressed confidence in free cash flow positivity, underscoring strategic focus on execution and operational enhancements.

Guidance

Methode reaffirmed fiscal 2026 guidance, projecting $900M–$1B in sales and $70M–$80M in adjusted EBITDA. The outlook accounts for a $100M sales decline from EV demand shifts but assumes operational improvements and cost recovery efforts. Free cash flow positivity is expected, though net income margin guidance remains unprovided due to uncertainties in foreign currency impacts and non-recurring items.

Additional News

Methode’s Q2 press release highlighted a non-GAAP EPS of -$0.19, beating estimates by $0.01, and revenue of $246.9M, exceeding forecasts by $9.21M. Despite this, shares fell 5% post-earnings as the wider-than-expected loss of $0.28 per share disappointed investors. The company’s adjusted EBITDA margin of 7.1% and reaffirmed guidance for $900M–$1B sales underscored its commitment to strategic operational enhancements. A conference call was scheduled to discuss the results, with management emphasizing progress in its transformation journey amid market headwinds.

Word Count:

150

Key Priority:

Methode’s Q2 earnings highlighted a revenue beat but a widening net loss, with CEO optimism on operational progress. The stock dipped post-earnings despite guidance reaffirmation, reflecting investor caution.