- Net sales of
$233.7 million , down 2.6% year-over-year - Net loss of
$15.9 million or 6.8% of net sales; adjusted EBITDA margin of 3.1% - Narrowed FY26 sales guidance, lowered adjusted EBITDA guidance to
$58 to$62 million - Finalized agreement for the sale of
Harwood Heights, IL facility - Subsequent to quarter-end, closed on the sale of dataMate business, purchase price of
$16 million
President and Chief Executive Officer
Consolidated Fiscal Third Quarter 2026 Financial Results
Methode's net sales were
Gross profit was
Net loss was
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization of Intangibles), a non-GAAP financial measure, was
Debt was
Net cash provided by operating activities was
Segment Fiscal Third Quarter 2026 Financial Results
Comparing the Automotive segment’s quarter to the same quarter of fiscal 2025:
- Net sales were
$106.2 million , down from$115.7 million . Net sales decreased$9.5 million or 8.2% largely due to a reduction in electric vehicle volumes, partially offset by new program launches. Foreign currency translation increased net sales by$5.8 million as compared to the same quarter of fiscal 2025. - Loss from operations was
$12.7 million , compared to a loss of$9.0 million in the prior year. The higher loss from operations was primarily due to higher selling and administrative expenses, as well as lower sales volumes and mix inNorth America .
Comparing the Industrial segment’s quarter to the same quarter of fiscal 2025:
- Net sales were
$122.5 million , up from$111.9 million . Net sales increased$10.6 million or 9.5%, due to higher sales volumes for lighting products for off-road equipment markets and power products, partially offset by lower sales volumes for lighting products for commercial vehicles. Foreign currency translation increased net sales by$5.9 million as compared to the same quarter of fiscal 2025. - Income from operations was
$25.2 million , increased from$22.6 million . Income from operations was 20.6% of net sales, increased from 20.2%. The increase was primarily due to foreign exchange and lower selling and administrative expenses, partially offset by higher material costs.
Comparing the Interface segment’s quarter to the same quarter of fiscal 2025:
- Net sales were
$5.0 million , down from$12.3 million . The decrease was primarily due to lower sales volumes of touch panels for appliances. - Income from operations was
$0.1 million , down from$2.2 million . Income from operations was 2.0% of net sales, decreased from 17.9%. The decrease was primarily due to lower sales volumes and product mix.
Guidance
The Company revised its fiscal 2026 full year guidance and now expects full-year fiscal 2026 net sales to be in the range of
| Fiscal 2026 | $ Millions |
| Net sales | |
| Interest expense | |
| Tax expense | |
| D&A | |
| Adjusted EBITDA | |
| Capital expenditures |
This guidance is based on the current market outlook based on third party forecasts and customer projections and the current
Due to the inherent difficulty of forecasting the timing and amount of certain items that would impact net loss, we are unable to reasonably estimate net income, the GAAP financial measure most directly comparable to Adjusted EBITDA. Accordingly, we are unable to provide a reconciliation of Adjusted EBITDA to net income with respect to the guidance provided.
Conference Call
The company will conduct a conference call and webcast tomorrow,
To participate in the conference call, please dial 888-506-0062 (domestic) or 973-528-0011 (international) and provide participant code 901289, at least ten minutes prior to the start of the event. A simultaneous webcast can be accessed through the company’s website, www.methode.com, on the Investors page.
A webcast replay will also be available on the company’s website, www.methode.com, on the Investors page.
About
Our solutions are found in the end markets of transportation (including automotive, commercial vehicle, e-bike, aerospace, bus, and rail), cloud computing infrastructure, construction equipment, and consumer appliances. Our business is managed on a segment basis, with those segments being Automotive, Industrial, and Interface.
Non-GAAP Financial Measures
To supplement the company's financial statements presented in accordance with generally accepted accounting principles in
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect, when made, our current views with respect to current events and financial performance. Such forward-looking statements are subject to many risks, uncertainties and factors relating to our operations and business environment, which may cause our actual results to be materially different from any future results, expressed or implied, by such forward-looking statements. All statements that address future operating, financial or business performance or our strategies or expectations are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “outlook” or “continue,” and other comparable terminology. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following:
- Dependence on the automotive, commercial vehicle, and construction industries;
- Timing, quality and cost of new program launches;
- Changes in electric vehicle (“EV”) demand;
- Investment in programs prior to the recognition of revenue;
- Production delays or cancelled orders;
- Changes in global trade policies, including tariffs;
- Failure to attract and retain qualified personnel;
- Inflation;
- Dependence on the availability and price of materials;
- Dependence on a small number of large customers;
- Dependence on our supply chain;
- Risks related to conducting global operations;
- Effects of potential catastrophic events or other business interruptions;
- Ability to withstand pricing pressures, including price reductions;
- Ability to compete effectively;
- Our lengthy sales cycle;
- Risks relating to our use of requirements contracts;
- Potential work stoppages;
- Ability to successfully benefit from acquisitions and divestitures;
- Ability to manage our debt levels;
- Ability to comply with restrictions and covenants under our credit agreement;
- Interest rate changes and variable rate instruments;
- Timing and magnitude of costs associated with restructuring activities;
- Recognition of goodwill and other intangible asset impairment charges;
- Risks associated with inventory;
- Ability to remediate a material weakness in our internal control over financial reporting;
- Currency fluctuations;
- Income tax rate fluctuations;
- Judgments related to accounting for tax positions;
- Risks associated with litigation and government inquiries;
- Risks associated with warranty claims;
- Changing government regulations;
- Changing requirements by stakeholders on environmental or social matters;
- Effects of IT disruptions or cybersecurity incidents;
- Ability to innovate and keep pace with technological changes; and
- Ability to protect our intellectual property.
Additional details and factors are discussed under the caption “Risk Factors” in our periodic reports filed with the Securities and Exchange Commission. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. Any forward-looking statements made by us speak only as of the date on which they are made. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise.
Contact Information
ir@methode.com
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in millions, except per-share data) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| (13 Weeks) | (13 Weeks) | (39 Weeks) | (40 Weeks) | |||||||||||||
| Net sales | $ | 233.7 | $ | 239.9 | $ | 721.1 | $ | 791.0 | ||||||||
| Cost of products sold | 194.9 | 198.6 | 591.1 | 647.2 | ||||||||||||
| Gross profit | 38.8 | 41.3 | 130.0 | 143.8 | ||||||||||||
| Selling and administrative expenses | 39.1 | 37.7 | 114.7 | 126.5 | ||||||||||||
| Amortization of intangibles | 5.8 | 5.8 | 17.4 | 17.6 | ||||||||||||
| Income (loss) from operations | (6.1 | ) | (2.2 | ) | (2.1 | ) | (0.3 | ) | ||||||||
| Interest expense, net | 5.4 | 5.5 | 17.0 | 16.5 | ||||||||||||
| Other expense, net | 1.6 | 0.5 | 4.3 | 2.9 | ||||||||||||
| Pre-tax income (loss) | (13.1 | ) | (8.2 | ) | (23.4 | ) | (19.7 | ) | ||||||||
| Income tax expense (benefit) | 2.8 | 6.2 | 12.7 | 14.6 | ||||||||||||
| Net income (loss) | $ | (15.9 | ) | $ | (14.4 | ) | $ | (36.1 | ) | $ | (34.3 | ) | ||||
| Income (loss) per share: | ||||||||||||||||
| Basic | $ | (0.45 | ) | $ | (0.41 | ) | $ | (1.02 | ) | $ | (0.97 | ) | ||||
| Diluted | $ | (0.45 | ) | $ | (0.41 | ) | $ | (1.02 | ) | $ | (0.97 | ) | ||||
| Cash dividends per share | $ | 0.05 | $ | 0.14 | $ | 0.17 | $ | 0.42 | ||||||||
CONSOLIDATED BALANCE SHEETS (in millions, except share and per-share data) | ||||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 133.7 | $ | 103.6 | ||||
| Accounts receivable, net | 215.6 | 241.0 | ||||||
| Inventories, net | 209.8 | 194.1 | ||||||
| Income tax receivable | 3.0 | 4.1 | ||||||
| Prepaid expenses and other current assets | 23.2 | 17.1 | ||||||
| Total current assets | 585.3 | 559.9 | ||||||
| Long-term assets: | ||||||||
| Property, plant and equipment, net | 225.6 | 221.6 | ||||||
| 175.5 | 172.7 | |||||||
| Other intangible assets, net | 225.6 | 238.4 | ||||||
| Operating lease right-of-use assets, net | 20.6 | 23.7 | ||||||
| Deferred tax assets | 41.1 | 37.8 | ||||||
| Pre-production costs | 22.7 | 31.7 | ||||||
| Other long-term assets | 9.9 | 20.0 | ||||||
| Total long-term assets | 721.0 | 745.9 | ||||||
| Total assets | $ | 1,306.3 | $ | 1,305.8 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 137.3 | $ | 125.9 | ||||
| Accrued employee liabilities | 36.5 | 32.0 | ||||||
| Other accrued liabilities | 47.1 | 50.2 | ||||||
| Short-term operating lease liabilities | 8.0 | 7.4 | ||||||
| Short-term debt | 0.2 | 0.2 | ||||||
| Income tax payable | 13.7 | 17.5 | ||||||
| Total current liabilities | 242.8 | 233.2 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt | 340.7 | 317.4 | ||||||
| Long-term operating lease liabilities | 15.2 | 18.2 | ||||||
| Other long-term liabilities | 6.7 | 16.9 | ||||||
| Deferred tax liabilities | 25.9 | 26.8 | ||||||
| Total long-term liabilities | 388.5 | 379.3 | ||||||
| Total liabilities | 631.3 | 612.5 | ||||||
| Shareholders' equity: | ||||||||
| Common stock, | 18.4 | 18.6 | ||||||
| Additional paid-in capital | 197.6 | 191.8 | ||||||
| Accumulated other comprehensive loss | (10.5 | ) | (29.8 | ) | ||||
| (11.5 | ) | (11.5 | ) | |||||
| Retained earnings | 481.0 | 524.2 | ||||||
| Total shareholders' equity | 675.0 | 693.3 | ||||||
| Total liabilities and shareholders' equity | $ | 1,306.3 | $ | 1,305.8 | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in millions) | ||||||||
| Nine Months Ended | ||||||||
| (39 Weeks) | (40 Weeks) | |||||||
| Operating activities: | ||||||||
| Net income (loss) | $ | (36.1 | ) | $ | (34.3 | ) | ||
| Adjustments to reconcile net loss to net cash provided (used) by operating activities: | ||||||||
| Depreciation and amortization | 44.5 | 42.5 | ||||||
| Stock-based compensation expense | 5.9 | 5.5 | ||||||
| Amortization of debt issuance costs | 1.2 | 0.8 | ||||||
| Partial write-off of unamortized debt issuance costs | 0.6 | 1.2 | ||||||
| Gain on sale of property, plant and equipment | (0.5 | ) | (0.3 | ) | ||||
| Impairment of long-lived assets | 0.1 | 0.4 | ||||||
| Inventory obsolescence | 3.2 | 7.4 | ||||||
| Change in deferred income taxes | (3.4 | ) | (0.2 | ) | ||||
| Other | (1.3 | ) | 1.1 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable (net) | 32.5 | 35.5 | ||||||
| Inventories, net | (15.6 | ) | (41.9 | ) | ||||
| Prepaid expenses and other assets | 10.5 | (0.4 | ) | |||||
| Accounts payable | 8.8 | (19.0 | ) | |||||
| Other liabilities | (17.3 | ) | (7.3 | ) | ||||
| Net cash provided (used) by operating activities | 33.1 | (9.0 | ) | |||||
| Investing activities: | ||||||||
| Purchases of property, plant and equipment | (16.6 | ) | (32.5 | ) | ||||
| Proceeds from settlement of net investment hedge | — | 3.1 | ||||||
| Proceeds from sale of property, plant and equipment | 1.3 | 2.7 | ||||||
| Proceeds from redemption of life insurance | 1.7 | — | ||||||
| Net cash provided (used) by investing activities | (13.6 | ) | (26.7 | ) | ||||
| Financing activities: | ||||||||
| Taxes paid related to net share settlement of equity awards | (1.1 | ) | (3.5 | ) | ||||
| Repayments of finance leases | (0.1 | ) | (0.2 | ) | ||||
| Debt issuance costs | (1.6 | ) | (1.8 | ) | ||||
| Purchases of common stock | — | (1.6 | ) | |||||
| Cash dividends | (6.5 | ) | (15.3 | ) | ||||
| Proceeds from borrowings | 88.5 | 60.0 | ||||||
| Repayments of borrowings | (78.2 | ) | (54.2 | ) | ||||
| Net cash provided (used) by financing activities | 1.0 | (16.6 | ) | |||||
| Effect of foreign currency exchange rate changes on cash and cash equivalents | 9.6 | (5.4 | ) | |||||
| Increase (decrease) in cash and cash equivalents | 30.1 | (57.7 | ) | |||||
| Cash and cash equivalents at beginning of the period | 103.6 | 161.5 | ||||||
| Cash and cash equivalents at end of the period | $ | 133.7 | $ | 103.8 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 15.5 | $ | 17.5 | ||||
| Income taxes, net of refunds | $ | 18.9 | $ | 17.6 | ||||
| Operating lease obligations | $ | 6.7 | $ | 6.9 | ||||
RECONCILIATION OF NON-GAAP MEASURES (unaudited) (in millions) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| (13 Weeks) | (13 Weeks) | (39 Weeks) | (40 Weeks) | |||||||||||||
| EBITDA: | ||||||||||||||||
| Net loss | $ | (15.9 | ) | $ | (14.4 | ) | $ | (36.1 | ) | $ | (34.3 | ) | ||||
| Income tax expense | 2.8 | 6.2 | 12.7 | 14.6 | ||||||||||||
| Interest expense, net | 5.4 | 5.5 | 17.0 | 16.5 | ||||||||||||
| Amortization of intangibles | 5.8 | 5.8 | 17.4 | 17.6 | ||||||||||||
| Depreciation | 8.8 | 8.3 | 27.1 | 24.9 | ||||||||||||
| EBITDA | 6.9 | 11.4 | 38.1 | 39.3 | ||||||||||||
| Transformation costs * | — | 0.9 | — | 7.9 | ||||||||||||
| Partial write-off of unamortized debt issuance costs | — | — | 0.6 | 1.2 | ||||||||||||
| Restructuring costs and asset impairment charges | 0.4 | — | 2.4 | 0.7 | ||||||||||||
| Net gain on sale of non-core assets | — | — | (0.5 | ) | (0.3 | ) | ||||||||||
| Adjusted EBITDA | $ | 7.3 | $ | 12.3 | $ | 40.6 | $ | 48.8 | ||||||||
| Adjusted EBITDA as a % of net sales | 3.1 | % | 5.1 | % | 5.6 | % | 6.2 | % | ||||||||
| * Represents professional fees related to the Company's cost reduction initiative. | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| (13 Weeks) | (13 Weeks) | (39 Weeks) | (40 Weeks) | |||||||||||||
| Free Cash Flow: | ||||||||||||||||
| Net cash provided (used) by operating activities | $ | 15.4 | $ | 28.1 | $ | 33.1 | $ | (9.0 | ) | |||||||
| Purchases of property, plant and equipment | (5.3 | ) | (8.5 | ) | (16.6 | ) | (32.5 | ) | ||||||||
| Free cash flow | $ | 10.1 | $ | 19.6 | $ | 16.5 | $ | (41.5 | ) | |||||||
| Net Debt: | ||||||||
| Short-term debt | $ | 0.2 | $ | 0.2 | ||||
| Long-term debt | 340.7 | 317.4 | ||||||
| Total debt | 340.9 | 317.6 | ||||||
| Less: cash and cash equivalents | (133.7 | ) | (103.6 | ) | ||||
| Net debt | $ | 207.2 | $ | 214.0 | ||||
RECONCILIATION OF NON-GAAP MEASURES (unaudited) (in millions, except per share data) | ||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||
| Income (loss) from operations | Pre-tax income (loss) | Net income (loss) | Diluted income (loss) per share | Income (loss) from operations | Pre-tax income (loss) | Net income (loss) | Diluted income (loss) per share | |||||||||||||||||||||||||
| $ | (6.1 | ) | $ | (13.1 | ) | $ | (15.9 | ) | $ | (0.45 | ) | $ | (2.2 | ) | $ | (8.2 | ) | $ | (14.4 | ) | $ | (0.41 | ) | |||||||||
| Transformation costs | — | — | — | $ | — | 0.9 | 0.9 | 0.7 | $ | 0.02 | ||||||||||||||||||||||
| Restructuring costs and asset impairment charges | 0.4 | 0.4 | 0.4 | $ | 0.01 | — | — | — | $ | — | ||||||||||||||||||||||
| Net gain on sale of non-core assets | — | — | — | $ | — | — | — | — | $ | — | ||||||||||||||||||||||
| Valuation allowance on deferred tax assets | — | — | 2.4 | $ | 0.07 | — | — | 6.5 | $ | 0.18 | ||||||||||||||||||||||
| Non- | $ | (5.7 | ) | $ | (12.7 | ) | $ | (13.1 | ) | $ | (0.37 | ) | $ | (1.3 | ) | $ | (7.3 | ) | $ | (7.2 | ) | $ | (0.21 | ) | ||||||||
| Nine Months Ended | ||||||||||||||||||||||||||||||||
| Income (loss) from operations | Pre-tax income (loss) | Net income (loss) | Diluted income (loss) per share | Income (loss) from operations | Pre-tax income (loss) | Net income (loss) | Diluted income (loss) per share | |||||||||||||||||||||||||
| $ | (2.1 | ) | $ | (23.4 | ) | $ | (36.1 | ) | $ | (1.02 | ) | $ | (0.3 | ) | $ | (19.7 | ) | $ | (34.3 | ) | $ | (0.97 | ) | |||||||||
| Transformation costs | — | — | — | $ | — | 7.9 | 7.9 | 6.1 | $ | 0.17 | ||||||||||||||||||||||
| Partial write-off of unamortized debt issuance costs | — | 0.6 | 0.5 | $ | 0.01 | — | 1.2 | 0.9 | $ | 0.03 | ||||||||||||||||||||||
| Restructuring costs and asset impairment charges | 2.4 | 2.4 | 2.0 | $ | 0.06 | 0.7 | 0.7 | 0.6 | $ | 0.02 | ||||||||||||||||||||||
| Net gain on sale of non-core assets | — | (0.5 | ) | (0.4 | ) | $ | (0.01 | ) | — | (0.3 | ) | (0.2 | ) | $ | (0.01 | ) | ||||||||||||||||
| Valuation allowance on deferred tax assets | — | — | 6.4 | $ | 0.18 | — | — | 14.0 | $ | 0.39 | ||||||||||||||||||||||
| Non- | $ | 0.3 | $ | (20.9 | ) | $ | (27.6 | ) | $ | (0.78 | ) | $ | 8.3 | $ | (10.2 | ) | $ | (12.9 | ) | $ | (0.37 | ) | ||||||||||
