Methode Electronics’ fourth quarter was marked by ongoing operational challenges and a negative market response. Management pointed to persistent headwinds in North American automotive and commercial vehicle lighting, as well as delays in key electric vehicle (EV) programs, as the primary reasons for profit pressures. CEO Jonathan DeGaynor described the quarter as “not comfortable, but necessary,” citing the need to address underperforming operations in Mexico, where program delays and volume reductions weighed heavily on margins. The company’s Industrial segment, especially power distribution solutions for data centers, provided some relief through year-over-year growth.
Is now the time to buy MEI? Find out in our full research report (it’s free for active Edge members).
Methode Electronics (MEI) Q4 CY2025 Highlights:
- Revenue: $233.7 million vs analyst estimates of $219.5 million (2.6% year-on-year decline, 6.5% beat)
- Adjusted EPS: -$0.37 vs analyst expectations of -$0.20 (85% miss)
- Adjusted EBITDA: $7.3 million vs analyst estimates of $14.28 million (3.1% margin, 48.9% miss)
- The company lifted its revenue guidance for the full year to $975 million at the midpoint from $950 million, a 2.6% increase
- EBITDA guidance for the full year is $60 million at the midpoint, below analyst estimates of $70.12 million
- Operating Margin: -2.4%, down from -0.9% in the same quarter last year
- Market Capitalization: $208 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Methode Electronics’s Q4 Earnings Call
- John Franzreb (Sidoti & Company) asked about the timeline for operational improvements in Mexico. CEO Jonathan DeGaynor explained the transformation is about six months behind Egypt, with a rebuilt team in place but continued revenue and productivity challenges.
- Luke Junk (Baird) questioned the rationale for divesting the Datamate business and its lack of alignment with core power solutions. DeGaynor clarified that Datamate was stable but not a growth driver, and focusing on higher-return data center opportunities was deemed more strategic.
- Luke Junk (Baird) also pressed on the sustainability of the $120 million data center run rate and whether this reflects a temporary spike or ongoing growth. DeGaynor emphasized the run rate is supported by electronic data interchange (EDI) forecasts and existing customer contracts, not one-off orders.
- Gary Prestopino (Barrington Research) inquired about the impact of EV program delays and cancellations, especially in North America. DeGaynor confirmed that several programs have been delayed or canceled, with take rates lower than originally anticipated, but noted stability in international EV programs.
- John Franzreb (Sidoti & Company) followed up on product portfolio strategy, asking if more divestitures are planned. DeGaynor said the review is ongoing and additional exits of non-core businesses are possible.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will monitor (1) the pace of operational recovery and cost improvements in Mexico, (2) the sustainability of growth and order flow in the Industrial Power Solutions segment, especially data centers, and (3) further progress on portfolio simplification and asset sales. Execution in these areas will be key to restoring profitability and supporting Methode’s long-term strategy.
Methode Electronics currently trades at $5.89, down from $7.55 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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