Methode Electronics (MEI) 5 Sep 24 2025 Q1 Earnings call transcript

In Methode Electronics' recent Fiscal 2025 Q1 earnings call, executives provided insights into the company's strategic transformation efforts and financial performance. The call, led by newly appointed CEO Jon DeGaynor and Interim CFO David Rawden, revealed a company in transition, focusing on rejuvenating its business and setting the stage for long-term value creation.

Key Messages and Themes

The call highlighted several key themes. Methode is currently undergoing a transformation to position itself for long-term success, with a focus on executing a pipeline of over 30 program launches in the next two years. Despite facing market headwinds in several sectors, the company remains optimistic about its future, particularly in the EV market, where it anticipates sales to exceed 20% of its total revenue in FY 2025.

Financial Performance

Methode's Q1 FY 2025 financial results showed a sales decrease to $259 million from $289.7 million in the previous year. This decline was primarily due to the roll-off of an EV lighting program, which impacted sales comparisons for most of FY 2025. Despite this, the company's efforts to improve gross profit contributed to a better-than-expected result. The company also highlighted its focus on managing its balance sheet and generating cash, reducing working capital by $9 million and improving cash from operations by over $16 million in the quarter.

EV Market and Program Launches

Methode's CEO, Jon DeGaynor, emphasized the importance of the EV market in the company's future growth. Sales in this sector accounted for 18% of Methode's total sales in Q1 FY 2025, and the company expects this percentage to grow further. Methode is also actively launching new EV programs, with over 30 launches planned for the next two years. These initiatives are aimed at diversifying Methode's product portfolio and capitalizing on the growing demand for electric vehicle solutions.

Strategic Focus and Transformation

Methode's strategy for transformation involves resetting performance, building and growing capabilities, and shifting the company's culture. The company is focusing on improving operational metrics, cost focus, and cost structure, while also leveraging global best practices and driving standardization across the organization. Methode is also actively building its executive team, including the appointment of Laura Kowalchik as CFO, who brings a strong track record of delivering business transformations.

Market Challenges and Guidance

Despite facing challenges in several key end markets, particularly automotive, commercial vehicles, construction, and agriculture, Methode is affirming its guidance for flat sales in FY 2025, followed by profitable organic sales growth in FY 2026. The company is closely monitoring market conditions, especially in the EV market, and is cautiously optimistic about its future prospects.

Conclusion

Methode Electronics' FY 2025 Q1 earnings call provided a comprehensive update on the company's strategic direction and financial performance. With a focus on transformation, program launches, and market diversification, Methode is positioning itself for long-term success in the evolving technology landscape. Investors and stakeholders will closely watch the company's execution of its strategic initiatives and financial performance in the coming quarters.