Methode Electronics Q3 2025: Navigating Contradictions in EV Growth, Stellantis Launches, and Appliance Roll-Off

These are the key contradictions discussed in Methode Electronics' latest 2025 Q3 earnings call, specifically including: EV and Hybrid Sector Surprises, Stellantis Program Launch Delays, and Appliance Program Roll-Off Impact:



Sales Decline and Market Challenges:
- Methode Electronics reported sales of $240 million for Q3 FY2025, with a year-over-year decrease and a sequential decrease of 18%.
- The drop was primarily attributed to the full impact of large auto program roll-offs and softer-than-expected demand in EV and automotive markets.

Operational Improvements:
- Despite lower sales, Methode achieved $4 million in higher gross profit compared to the previous year, driven by improved operational execution, lower scrap, and premium freight costs.
- These efficiencies reduced the breakeven sales point, enabling better margin leverage on future sales growth.

EV Activity and Market Dynamics:
- EV sales represented 24% of Methode's consolidated total sales, although this percentage increased, EV sales on a dollar basis decreased slightly.
- The decreased EV sales were due to customer demand impacting the quarter and weaker automotive markets, especially in North America and Europe.

Financial and Operating Performance:
- The company returned to positive free cash flow of $20 million, and adjusted pretax loss improved by $7 million year-over-year.
- This improvement was driven by operational improvements, reduced accounts receivable, and disciplined cost management.

Transformational and Strategic Initiatives:
- Methode extensively rebuilt its executive management team and launched 20 new programs year-to-date, focusing on operational execution and cost efficiencies.
- The focus is on driving profitable organic sales growth in fiscal '26, with a strategic focus on expanding Power Solutions enterprise, particularly in data centers.