Methode Electronics (MEI) 5 Dec 24 2025 Q2 Earnings call transcript

In Methode Electronics' recent earnings call for the second quarter of Fiscal 2025, the company showcased solid financial performance, driven by a focus on electric vehicle (EV) activity, strategic launches, and operational improvements. The company's management team, led by CEO Jonathan DeGaynor and CFO Laura Kowalchik, provided insights into the company's financial health and strategic outlook, shedding light on the challenges and opportunities ahead.

Sales and Pretax Income Surpass Expectations

Methode Electronics reported sales of $293 million for the second quarter of Fiscal 2025, with an adjusted pretax income of $9 million. These figures were influenced by the extra week in the fiscal year, which added approximately $20 million to the top line. The sales growth was attributed to higher demand in data centers and electric vehicles, as well as program launches in Europe. Despite the positive sales performance, the company faced challenges in the commercial vehicle market, which impacted its lighting business.

The pretax income for the quarter exceeded expectations, thanks to cost reduction efforts, notably in freight costs. The company's strategic focus on operational improvements, including better overhead management and scrap reduction, led to these positive results.

EV Activity and Strategic Launches

Methode Electronics is capitalizing on the growing EV market, with sales in the quarter representing 20% of the consolidated total. The company anticipates further growth in EV sales, with expectations of over 20% for the full year. The strategic launches of power distribution products for EV applications, as well as traditional auto and defense sectors, are driving this growth.

Executive Moves and Strategic Focus

CEO DeGaynor highlighted the company's strategic moves, including the appointment of Lars Ullrich as Senior Vice President of Global Automotive Business and the promotion of Sadek El Idrissi to lead operations and engineering in Europe and the Middle East. These appointments are part of Methode Electronics' efforts to return to a "One Methode" mindset and improve execution across the business.

Looking Ahead

Looking ahead, Methode Electronics is focused on transforming its business while positioning it for profitable growth in the next fiscal year. The company is prioritizing the execution of its large pipeline of new programs, with over 30 launches in Fiscal 2025 and another 20-plus launches in Fiscal 2026. This strategic focus on product development and operational improvements is expected to drive future growth and profitability.

Conclusion

Methode Electronics' second quarter Fiscal 2025 results demonstrate a company on the move, with a solid financial performance driven by strategic initiatives and operational improvements. The company's focus on electric vehicle markets, strategic launches, and executive appointments are all indicative of a company looking to the future with confidence. As Methode Electronics continues to navigate the challenges and opportunities in its market, investors and stakeholders will be watching closely for further signs of growth and profitability.