5 Revealing Analyst Questions From Methode Electronics's Q1 Earnings Call

Yahoo

16-07-2025

Methode Electronics reported first quarter results that disappointed the market, as evidenced by a significant share price drop. Management attributed the underwhelming performance to unexpected inventory write-offs and continued challenges within its automotive programs. CEO Jon DeGaynor described the quarter as weighed down by 'one-time, or historic in nature' items, including a $15 million inventory adjustment largely tied to delayed or canceled automotive and EV programs. DeGaynor was candid about the impact of these issues, citing operational improvements that were 'largely masked' by these charges.
Is now the time to buy MEI? Find out in our full research report (it's free).
Methode Electronics (MEI) Q1 CY2025 Highlights:
Revenue: $257.1 million vs analyst estimates of $228.8 million (7.3% year-on-year decline, 12.4% beat)
Adjusted EPS: -$0.77 vs analyst estimates of $0.03 (significant miss)
Adjusted EBITDA: -$7.1 million vs analyst estimates of $19.7 million (-2.8% margin, significant miss)
EBITDA guidance for the upcoming financial year 2026 is $75 million at the midpoint, below analyst estimates of $95.47 million
Operating Margin: -8.4%, down from -3.4% in the same quarter last year
Market Capitalization: $228.1 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 Methode Electronics's Q1 Earnings Call
Luke Junk (Baird) asked about the feasibility of doubling EBITDA despite a $100 million sales decline; CEO Jon DeGaynor pointed to eliminated one-time costs and improved operational execution as key levers.
Luke Junk (Baird) inquired about the risk of further EV launch delays and how management is mitigating these uncertainties; DeGaynor noted reliance on third-party forecasts and ongoing cost reductions to address potential disruptions.
Gary Prestopino (Barrington) pressed for details on the inventory charges and reasoning for not adjusting these out of non-GAAP results; DeGaynor explained these were operational in nature and thus included in adjusted EBITDA.
John Franzreb (Sidoti) questioned the expected mix of auto versus industrial sales going forward; DeGaynor indicated a strategic move toward a more balanced 50/50 split, with growth anticipated in data center and industrial segments.
Gary Prestopino (Barrington) also sought clarification on the recent dividend reduction and its relation to covenant compliance; DeGaynor confirmed the cut aligns with peer yields and provides greater financial flexibility.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace and quality of new program launches, particularly in data centers and the industrial segment, (2) the company's ability to maintain cost discipline as it rightsizes operations and plant footprint, and (3) any signs of stabilization or renewed growth in EV demand. Outcomes from cost recovery efforts with automakers and progress on portfolio reviews will also be important markers of execution.
Methode Electronics currently trades at $6.48, down from $10.28 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it's free).
Our Favorite Stocks Right Now
Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.