Methode Electronics 2026 Q2 Earnings Widened Losses and Revenue Drop

Methode Electronics (MEI) reported a wider-than-expected loss for fiscal 2026 Q2, missing earnings estimates despite exceeding revenue forecasts. The company’s net sales declined 15.6% year-over-year to $246.9 million, while its net loss expanded to $9.9 million. Despite reaffirming fiscal 2026 guidance, the results highlight ongoing challenges in stabilizing profitability.

Revenue

Methode’s total revenue dropped 15.6% to $246.9 million in 2026 Q2, driven by weaker demand across key segments. The Automotive division led the decline, with sales falling 24.1% to $110.5 million, primarily due to legacy program roll-offs and lower sensor and user interface product volumes. The Industrial segment saw a 3.4% decrease to $126.9 million, impacted by reduced lighting product sales for commercial vehicles and radio remote control devices. The Interface segment also faced a 39.6% decline to $9.5 million, attributed to lower touch panel sales for appliances. Consolidated revenue was further reduced by $18.8 million in eliminations/corporate adjustments.

Earnings/Net Income

Methode’s losses widened significantly, with a net loss of $9.9 million, or $0.28 per share, compared to a $0.05 loss in 2025 Q2. The company’s adjusted EBITDA margin contracted to 7.1%, reflecting operational challenges. The performance underscores a deteriorating financial outlook, with both EPS and net income showing substantial declines.

Post-Earnings Price Action Review

The strategy of buying Methode shares after a revenue increase quarter-over-quarter and holding for 30 days underperformed sharply. Over three years, it delivered an 83.52% loss, far worse than the 70.56% benchmark return. With an excess return of -154.08% and a CAGR of -45.43%, the strategy highlights the risks of relying on short-term revenue gains in Methode’s volatile stock.

CEO Commentary

CEO Jon DeGaynor emphasized progress in the company’s transformation, citing operational improvements and a focus on reliability. Despite a $100 million annual sales decline linked to EV market shifts, DeGaynor reaffirmed fiscal 2026 guidance and expressed confidence in achieving positive free cash flow.

Guidance

Methode reaffirmed its fiscal 2026 net sales target of $900–$1,000 million and adjusted EBITDA of $70–$80 million. The company also outlined capital expenditures of $24–$29 million and interest expenses of $21–$23 million, while acknowledging risks such as tariffs, EV demand volatility, and global economic instability.

Additional News

Recent non-earnings developments include a 5% stock drop following the Q2 earnings miss, despite beating revenue estimates. The company also announced a $6.4 million positive free cash flow for the first half of fiscal 2026, a marked improvement from negative $61.1 million in the prior year. Additionally, Methode highlighted progress in its transformation, with leadership emphasizing resilience amid market challenges.

Revenue

Methode’s Automotive segment, its largest, saw a 24.1% revenue decline to $110.5 million, driven by legacy program roll-offs and reduced sensor sales. The Industrial segment’s $126.9 million in revenue reflected a 3.4% decrease, impacted by lower commercial vehicle lighting sales. Meanwhile, the Interface segment’s revenue fell 39.6% to $9.5 million, primarily due to appliance touch panel demand. Consolidated revenue stood at $246.9 million, with eliminations/corporate adjustments reducing the total.

Earnings/Net Income

The company’s net loss widened to $9.9 million, or $0.28 per share, compared to a $1.6 million loss in 2025 Q2. Adjusted EBITDA margin contracted to 7.1%, underscoring operational pressures. The results indicate a challenging earnings trajectory, with both EPS and net income showing significant deterioration.

Post-Earnings Price Action Review

The underperformance of the revenue-based trading strategy highlights Methode’s stock volatility. Over three years, the strategy yielded an 83.52% loss, vastly underperforming the benchmark’s 70.56% return. With an excess return of -154.08% and a CAGR of -45.43%, investors face substantial risks from short-term revenue-driven trades.

Additional News

Methode’s shares fell 5% post-earnings despite beating revenue estimates, reflecting investor concerns over the wider-than-expected loss. The company also reported a $6.4 million positive free cash flow for the first half of fiscal 2026, a significant improvement from negative $61.1 million in the prior year. Leadership reiterated progress in its transformation, emphasizing operational resilience amid evolving market conditions.