Executive Summary
Methode Electronics Inc (MEI) reported its Q1 2025 financial results, revealing a significant decline in revenue primarily attributed to the phase-out of specific EV lighting programs and challenges faced in key markets such as automotive and commercial vehicles. Revenue for the quarter was $258.5 million, reflecting an 11% decrease year-over-year (YoY) and a 7% decrease quarter-over-quarter (QoQ). Although the company registered a pre-tax loss of $9 million, management noted a sequential improvement, demonstrating an ability to control costs despite negative revenue pressures. The transition towards EV product launches remains crucial, as Methode anticipates an increase in EV sales participation to over 20%, which is predicted to bolster revenue in fiscal 2026. Management emphasized their commitment to operational improvement and transformation efforts, which they believe are essential to achieving stable growth moving forward.
Key Performance Indicators
QoQ: -6.78% | YoY:-10.77%
QoQ: 43.87% | YoY:-17.41%
QoQ: 7.41% | YoY:-297.37%
QoQ: 68.06% | YoY:-2 133.33%
QoQ: 67.90% | YoY:-2 163.49%
Key Insights
**Revenue Performance**: $258.5 million, down 11% YoY and 7% QoQ.
**Gross Profit**: $44.6 million, with a gross profit margin of 17.25%. Notable increase from previous quarter due to operational improvements and price management strategies.
**Net Income**: Reported a net loss of $18.3 million, or EPS of -$0.52.
**Cash Flow**: Generated $10.9 million from operations, with a capital expenditure of $13.6 million and free cash flow at -$2.7 million, representing significant year-over-year improvemen...
Financial Highlights
Revenue Performance: $258.5 million, down 11% YoY and 7% QoQ.
Gross Profit: $44.6 million, with a gross profit margin of 17.25%. Notable increase from previous quarter due to operational improvements and price management strategies.
Net Income: Reported a net loss of $18.3 million, or EPS of -$0.52.
Cash Flow: Generated $10.9 million from operations, with a capital expenditure of $13.6 million and free cash flow at -$2.7 million, representing significant year-over-year improvement in cash performance.
Balance Sheet Health: Maintained $111.3 million in cash, with a reduction in total debt, highlighting effective cash management amidst a challenging revenue environment.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
258.50M |
-10.77% |
-6.78% |
| Gross Profit |
44.60M |
-17.41% |
43.87% |
| Operating Income |
-7.50M |
-297.37% |
7.41% |
| Net Income |
-18.30M |
-2 133.33% |
68.06% |
| EPS |
-0.52 |
-2 163.49% |
67.90% |
Key Financial Ratios
operatingProfitMargin
-2.9%
operatingCashFlowPerShare
$0.31
freeCashFlowPerShare
$-0.08
dividendPayoutRatio
-27.9%
Management Commentary
1. Transformation Focus: CEO Jon DeGaynor stated, "Methode is at a pivotal point and we are beginning a journey to transform the business to position it for long-term value creation."
2. Market Challenges: DeGaynor highlighted, "the roll-off of the EV lighting program will impact our prior year sales comparisons for most of fiscal 2025."
3. Sales Guidance: Despite current challenges, he affirmed, "we are positioned to achieve flat sales in fiscal 2025, followed by profitable organic growth in fiscal 2026."
"We expect the EV percentage to grow even further and should be over 20% for our fiscal 2025." - Jon DeGaynor
â Jon DeGaynor
"We are establishing a foundation for future success while transforming our operational structure for efficiency and growth." - Jon DeGaynor
â Jon DeGaynor
Forward Guidance
Methode Electronics' management is cautiously optimistic about flat sales for fiscal 2025, citing significant program launches in the pipeline as a major driver for future growth. They have reaffirmed expectations for stronger adjusted pretax profits and operational enhancements in H2 2025. Meanwhile, they plan to focus on reducing supply chain costs and improving cash flow generation. Management has articulated the necessity for rigorous tracking of KPIs during this transformative period, emphasizing that any disruptions in launch timing could alter projections significantly.