Methode Electronics, Inc. (MEI) Q4 2026: Strong Recovery in Profitability — Positive Outlook

Methode Electronics, Inc. reported a significant turnaround in its fourth quarter of fiscal 2026, with net sales of $298.1 million, reflecting an increase of $41.0 million or 15.9% year-over-year compared to $257.1 million in the same quarter of fiscal 2025. This marks a notable recovery from the previous year's performance, where the company faced substantial losses.

The quarter's results indicate a positive trajectory for shareholders, as the company not only returned to profitability with a net income of $0.4 million (or $0.01 per diluted share) but also improved its operational metrics significantly. This is a stark contrast to the net loss of $28.3 million (or $0.80 per diluted share) reported in the same quarter last year.

Key Financial Metrics for Q4 2026:

• Net Sales: $298.1 million, up 15.9% YoY from $257.1 million
• Net Income: $0.4 million, compared to a net loss of $28.3 million
• Adjusted EBITDA: $26.9 million, compared to an adjusted EBITDA loss of $7.1 million
• Gross Profit: $72.2 million, up from $19.6 million in Q4 2025
• Income from Operations: $10.9 million, compared to a loss of $23.6 million in Q4 2025

The results reflect Methode's successful execution of its transformation strategy, which has focused on enhancing operational efficiencies and capitalizing on customer recoveries, particularly in the Automotive segment. The Automotive segment alone saw net sales rise to $144.9 million, an increase of 28.3% from $112.9 million in the prior year, driven by customer recoveries and favorable foreign exchange impacts.

Fiscal Year 2026 Overview:

For the full fiscal year 2026, Methode reported net sales of $1,019.2 million, a decrease of 2.8% from $1,048.1 million in fiscal 2025. However, the company narrowed its net loss to $35.7 million (or $1.01 per diluted share) from $62.6 million (or $1.77 per diluted share) in the previous year. Adjusted EBITDA for the year was $68.2 million, up 60.5% year-over-year.

Additional Highlights:

• Free Cash Flow: The company generated $15.6 million in free cash flow, a significant improvement from an outflow of $15.2 million in fiscal 2025.
• Debt Management: Total debt increased slightly to $325.0 million from $317.6 million, but net debt decreased to $185.4 million from $214.0 million.
• Cash Position: Cash and cash equivalents at the end of the fiscal year stood at $139.6 million, up from $103.6 million a year earlier.

Guidance for Fiscal Year 2027:

Looking ahead, Methode has provided guidance for fiscal 2027, expecting net sales to be in the range of $1.025 billion to $1.075 billion and adjusted EBITDA to be between $72 million and $82 million. This outlook reflects management's confidence in continuing operational improvements and a disciplined approach to capital allocation.

Analyst View:

Overall, the fourth quarter results and full-year performance indicate a strong recovery for Methode Electronics. The return to profitability, coupled with improved operational metrics and positive cash flow generation, positions the company favorably for future growth. Shareholders should view this quarter as a turning point, with the potential for sustained growth driven by strategic investments in high-demand markets such as data centers and vehicle electrification.

Forward Catalyst:

Investors should closely monitor the company's execution of its fiscal 2027 guidance and any developments in its strategic initiatives, particularly in expanding its presence in high-growth sectors. The upcoming conference call on June 25, 2026, will provide further insights into management's strategies and expectations moving forward.

Note: The following tables present amounts in millions.

Three Months Ended	May 2, 2026	May 3, 2025	Fiscal Year Ended	May 2, 2026	May 3, 2025
Net Sales	$298.1 million	$257.1 million	Net Sales	$1,019.2 million	$1,048.1 million
Cost of Products Sold	$225.9 million	$237.5 million	Cost of Products Sold	$817.0 million	$884.5 million
Gross Profit	$72.2 million	$19.6 million	Gross Profit	$202.2 million	$163.6 million
Selling and Administrative Expenses	$5.7 million	$5.8 million	Selling and Administrative Expenses	$23.1 million	$23.4 million
Income from Operations	$10.9 million	($23.6 million)	Income from Operations	$8.8 million	($23.6 million)
Interest Expense	$12.3 million	($2.1 million)	Interest Expense	$25.0 million	$12.5 million
Income before Income Taxes	$0.4 million	($28.3 million)	Income before Income Taxes	($1.01 per share)	($1.77 per share)
Net Income	$0.01 per share	($0.80 per share)	Net Income	($1.01 per share)	($1.77 per share)
Cash Dividends Declared per Share	$0.05	$0.14	Cash Dividends Declared per Share	$0.22	$0.56

	May 2, 2026	May 3, 2025
Cash and Cash Equivalents	$139.6 million	$103.6 million
Accounts Receivable, Net	$257.3 million	$241.0 million
Inventories, Net	$178.7 million	$194.1 million
Income Tax Receivable	$3.2 million	$4.1 million
Prepaid Expenses and Other Current Assets	$21.2 million	$17.1 million
Total Current Assets	$600.0 million	$559.9 million
Property, Plant and Equipment, Net	$209.3 million	$221.6 million
Goodwill	$174.9 million	$172.7 million
Other Intangible Assets, Net	$218.9 million	$238.4 million
Operating Lease Right-of-Use Assets, Net	$20.5 million	$23.7 million
Deferred Tax Assets	$39.5 million	$37.8 million
Pre-production Costs	$18.2 million	$31.7 million
Other Long-term Assets	$24.8 million	$20.0 million
Total Long-term Assets	$706.1 million	$745.9 million
Total Assets	$1,306.1 million	$1,305.8 million
Accounts Payable	$134.1 million	$125.9 million
Accrued Employee Liabilities	$49.1 million	$32.0 million
Other Accrued Liabilities	$45.6 million	$50.2 million
Short-term Operating Lease Liabilities	$8.9 million	$7.4 million
Short-term Debt	$0.2 million	$0.2 million
Income Tax Payable	$15.6 million	$17.5 million
Total Current Liabilities	$253.5 million	$233.2 million
Long-term Debt	$324.8 million	$317.4 million
Long-term Operating Lease Liabilities	$14.8 million	$18.2 million
Other Long-term Liabilities	$5.8 million	$16.9 million
Deferred Tax Liabilities	$29.7 million	$26.8 million
Total Long-term Liabilities	$375.1 million	$379.3 million
Total Liabilities	$628.6 million	$612.5 million
Common Stock	$18.4 million	$18.6 million
Additional Paid-in Capital	$200.1 million	$191.8 million
Accumulated Other Comprehensive Loss	($8.8 million)	($29.8 million)
Treasury Stock	($11.5 million)	($11.5 million)
Retained Earnings	$479.3 million	$524.2 million
Total Shareholders' Equity	$677.5 million	$693.3 million
Total Liabilities and Shareholders' Equity	$1,306.1 million	$1,305.8 million

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