Methode Electronics’ second quarter results prompted a significant positive reaction from the market, as revenue and adjusted EBITDA both surpassed Wall Street’s expectations despite ongoing year-over-year sales declines. Management attributed the results to operational improvements, cost reductions, and ongoing strength in Data Center Power Product sales, which helped offset continued weakness in North American automotive programs. CEO Jonathan DeGaynor emphasized, “Our income from operations was up $9 million from the prior year. This was the result of reduction in SG&A costs and operational improvements that we have been sharing with you.”
Is now the time to buy MEI? Find out in our full research report (it’s free).
Methode Electronics (MEI) Q2 CY2025 Highlights:
- Revenue: $240.5 million vs analyst estimates of $217 million (7% year-on-year decline, 10.8% beat)
- Adjusted EPS: -$0.22 vs analyst estimates of -$0.25 (12% beat)
- Adjusted EBITDA: $15.7 million vs analyst estimates of $10.71 million (6.5% margin, 46.6% beat)
- The company reconfirmed its revenue guidance for the full year of $950 million at the midpoint
- EBITDA guidance for the full year is $75 million at the midpoint, above analyst estimates of $70.43 million
- Operating Margin: 0.8%, up from -2.7% in the same quarter last year
- Market Capitalization: $284.2 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 Q2 Earnings Call
- Luke Junk (Baird) asked about the automotive segment's ability to contribute to EBITDA growth, especially given North American program roll-offs. CEO Jonathan DeGaynor explained that while EMEA showed improvement and Asia was stable, North America remains challenged, with future growth expected as new EV and data center programs ramp up.
- Luke Junk (Baird) inquired about strategic priorities in Asia after program roll-offs. DeGaynor emphasized that Asia is leading development of new EV products, serving as a launch and validation hub, and remains operationally strong despite recent headwinds.
- Luke Junk (Baird) questioned the impact of appliance interface program roll-offs and potential offsets from transceiver business. DeGaynor confirmed the roll-off is evident in current results and is being partially backfilled by ramping data center activities.
- John Franzreb (Sidoti) asked about changes in tariff expectations and their impact. DeGaynor said there has been no material change, but current tariff regimes are creating new RFQ opportunities due to Methode’s USMCA-compliant footprint.
- Gary Prestopino (Barrington) sought clarity on data center power product growth and market share. DeGaynor stated the business is not range-bound, with further growth possible as the company increases its share through expanded customer coverage and new product innovation.
Catalysts in Upcoming Quarters
In the coming quarters, StockStory analysts will focus on (1) the pace and success of over 30 planned new program launches, (2) ongoing improvements in operating efficiency and cost structure, and (3) signs of recovery in North American and global EV demand. Progress in capturing additional data center power opportunities and the company’s ability to maintain strong free cash flow will also be key indicators of successful execution.
Methode Electronics currently trades at $8.07, up from $7.49 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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