Methode Electronics, Inc. Q2 FY2026 earnings call

• Methode transformation is on track with sequential financial improvement. Egypt and Mexico facilities saw quality, delivery, and cost improvements with Egypt ahead in transformation. • Organization is being refined to work cross-functionally as One Methode, with top grading of leadership completed. • Product portfolio aligned with megatrends like data centers and vehicle electrification. • Corporate headquarters relocation to Southfield, Michigan underway for future growth. • Power Solutions have over 60 years of history, data center sales grew from over $40 million in fiscal 2024 to over $80 million last year, with expectations of long-term growth.

Net sales for the quarter were $247 million, up 3% sequentially. Adjusted EBITDA rose 12% sequentially to $18 million. Year-over-year, second quarter net sales were $246.9 million vs $292.6 million in fiscal 2025, a 16% decrease. Adjusted EBITDA was $17.6 million, down $9.1 million from the same period last year. No detailed product segment breakdown by revenue contribution % provided.

• Reaffirmed full year sales guidance of $900 million to $1 billion and adjusted EBITDA of $70 million to $80 million. • Expect second half of fiscal 2026 to be stronger. • Fiscal 2026 free cash flow expected to be positive compared to prior year's outflow of $15 million.

• Exogenous volatility including Nexperia, commercial vehicle sales turbulence, and economic uncertainty. • Tariffs and their impact on revenue predictability, with external market turbulence making it hard to narrow guidance. • Impact of next period chip issues on customer plans.

Q: Luke Junk asked about the Power business trends, EV and data center, and full year expectations.

A: Jonathan DeGaynor responded on EV headwinds in North America due to delayed launches, data center growth on track with guidance but not enough to adjust guidance yet.

Q: John Franzreb inquired about guidance comfort at lower end, industrial operating profit drivers.

A: Jonathan DeGaynor said exogenous volatility makes narrowing guidance risky, industrial operating profit improvement due to better plant performance.

Q: Gary Prestopino asked about like-for-like sales, EV sales reporting, cash taxes, and program launches.

A: Laura Kowalchik and Jonathan DeGaynor provided details on like-for-like sales, EV sales breakdown, cash taxes, and program launches primarily power-based in Mexico and others.

Q: John Franzreb followed up on cash outflow, receivables, tariffs, and calendar 2026 end markets.

A: Laura Kowalchik discussed receivables timing, Jonathan DeGaynor talked about tariffs status quo and calendar 2026 end market expectations