Methode Electronics Plunges to Deeper Losses Amid Sales Slump

TL;DR

**MEI is bleeding cash and sales are tanking; get out now before it gets worse.**

AI Summary

Methode Electronics, Inc. (MEI) reported a significant decline in financial performance for the three and six months ended November 1, 2025. Net sales decreased by 15.6% to $246.9 million for the three-month period, down from $292.6 million in the prior year, and fell by 11.5% to $487.4 million for the six-month period, compared to $551.1 million previously. The company swung to a pre-tax loss of $4.2 million for the quarter, a sharp contrast to the $1.6 million pre-tax income in the same period last year, and expanded its six-month pre-tax loss to $10.3 million from $11.5 million. Consequently, MEI posted a net loss of $9.9 million for the quarter, a substantial increase from the $1.6 million net loss in the prior year, and a six-month net loss of $20.2 million, slightly higher than the $19.9 million loss in the previous year. Basic and diluted loss per share worsened to $0.28 for the quarter and $0.57 for the six months. Cash dividends per share were also significantly reduced to $0.05 for the quarter and $0.12 for the six months, down from $0.14 and $0.28 respectively. Despite the losses, cash and cash equivalents increased to $118.5 million from $103.6 million at May 3, 2025, driven by net cash provided by operating activities of $17.7 million for the six months.

Why It Matters

This filing reveals a concerning trend for Methode Electronics, with significant declines in revenue and widening net losses, which could erode investor confidence and impact stock performance. The reduction in cash dividends per share from $0.14 to $0.05 quarter-over-quarter directly affects income-focused investors. For employees, sustained losses could signal future cost-cutting measures or reduced investment in growth initiatives. In a competitive landscape, MEI's struggle to maintain sales and profitability could lead to market share erosion, especially in its key transportation and cloud computing infrastructure segments, potentially benefiting rivals.

Risk Assessment

Risk Level: high — The company reported a net loss of $9.9 million for the three months ended November 1, 2025, a significant increase from the $1.6 million net loss in the prior year, and net sales decreased by 15.6% to $246.9 million. This substantial decline in both top-line revenue and bottom-line profitability indicates significant operational challenges and financial instability.

Analyst Insight

Investors should consider divesting from MEI given the consistent decline in net sales and widening net losses. The significant reduction in cash dividends also signals a lack of confidence in future profitability, making it a less attractive investment for income-seeking portfolios.

Financial Highlights

revenue

$487.4M

net Income

($20.2M)

eps

($0.57)

cash Position

$118.5M

revenue Growth

-11.5%

Key Numbers

• $246.9M — Net Sales (Q3 2025) (Decreased 15.6% from $292.6M in Q3 2024)
• $487.4M — Net Sales (YTD 2025) (Decreased 11.5% from $551.1M in YTD 2024)
• ($9.9M) — Net Loss (Q3 2025) (Worsened from ($1.6M) in Q3 2024)
• ($20.2M) — Net Loss (YTD 2025) (Slightly worsened from ($19.9M) in YTD 2024)
• ($0.28) — Loss Per Share (Q3 2025) (Worsened from ($0.05) in Q3 2024)
• $0.05 — Cash Dividends Per Share (Q3 2025) (Reduced from $0.14 in Q3 2024)
• $118.5M — Cash and Cash Equivalents (Increased from $103.6M at May 3, 2025)
• $17.7M — Net Cash from Operating Activities (YTD 2025) (Improved from ($37.1M) in YTD 2024)
• 15.6% — Quarterly Net Sales Decrease (Percentage decrease in net sales for the three months ended November 1, 2025)
• 11.5% — Six-Month Net Sales Decrease (Percentage decrease in net sales for the six months ended November 1, 2025)

Key Players & Entities

• METHODE ELECTRONICS INC (company) — registrant
• SEC (regulator) — U.S. Securities and Exchange Commission
• FASB (regulator) — Financial Accounting Standards Board
• $246.9 million (dollar_amount) — Net sales for three months ended November 1, 2025
• $292.6 million (dollar_amount) — Net sales for three months ended November 2, 2024
• $9.9 million (dollar_amount) — Net loss for three months ended November 1, 2025
• $1.6 million (dollar_amount) — Net loss for three months ended November 2, 2024
• $0.28 (dollar_amount) — Basic and diluted loss per share for three months ended November 1, 2025
• $0.05 (dollar_amount) — Cash dividends per share for three months ended November 1, 2025
• $118.5 million (dollar_amount) — Cash and cash equivalents as of November 1, 2025

FAQ

Risk Factors

• Customer Concentration [high — market]: The company relies on a limited number of customers for a significant portion of its revenue. For the six months ended November 1, 2025, sales to the largest customer represented approximately 17% of total net sales. A substantial loss of business from any of these key customers could have a material adverse effect on MEI's financial condition and results of operations.
• Supply Chain Disruptions [medium — operational]: MEI's manufacturing processes depend on the timely supply of raw materials and components from various suppliers. Disruptions in the supply chain, whether due to geopolitical events, natural disasters, or supplier issues, could impact production schedules and increase costs. The company experienced some supply chain challenges in the past that affected its ability to meet demand.
• Foreign Currency Exchange Rate Fluctuations [medium — financial]: MEI operates globally and is exposed to fluctuations in foreign currency exchange rates. Adverse movements in these rates can impact the reported value of international sales and expenses, as well as the value of assets and liabilities held in foreign currencies. The company does not currently engage in extensive hedging activities.
• Compliance with Environmental Regulations [low — regulatory]: The company's operations are subject to various environmental laws and regulations in the jurisdictions where it operates. Non-compliance could result in fines, penalties, and reputational damage. MEI invests in environmental compliance but faces ongoing scrutiny and potential changes in regulatory requirements.

Industry Context

Methode Electronics operates in the highly competitive electronic components and systems manufacturing industry. This sector is characterized by rapid technological advancements, cyclical demand tied to end markets like automotive and industrial, and significant global competition. Companies in this space must continuously innovate and manage complex supply chains to remain competitive.

Regulatory Implications

MEI is subject to standard business regulations, including environmental compliance and financial reporting standards. The current financial performance and potential for future losses could attract increased scrutiny from investors and regulatory bodies regarding financial stability and operational efficiency.

What Investors Should Do

1. Monitor customer concentration risk: Given that the largest customer represents 17% of sales, any signs of weakening demand or loss of business from this customer should be a major red flag.
2. Analyze the drivers of revenue decline: Understanding whether the 15.6% quarterly and 11.5% year-to-date sales drop is due to market-wide issues, specific product segment weakness, or competitive pressures is crucial for assessing future recovery.
3. Evaluate the sustainability of cash position: While cash increased to $118.5M, this was supported by operating cash flow of $17.7M. Investors should assess if this operating cash flow generation is sustainable given the current net loss.
4. Assess dividend reduction impact: The significant cut in cash dividends per share (from $0.14 to $0.05 quarterly) signals management's focus on conserving cash amidst financial challenges and may deter income-focused investors.

Key Dates

• 2025-11-01: End of Second Quarter of Fiscal Year 2026 — Reporting period for the 10-Q, showing a significant decline in net sales and a swing to net loss.
• 2025-05-03: End of First Quarter of Fiscal Year 2026 — Prior balance sheet date for comparison, showing a lower cash and cash equivalents balance.

Glossary

Net Sales

The total revenue generated from the sale of goods and services, net of returns, allowances, and discounts. (Key indicator of the company's top-line performance, showing a significant decrease of 15.6% for the quarter and 11.5% year-to-date.)

Pre-tax Loss

A financial loss incurred before accounting for income taxes. (Indicates the company's operational profitability before tax considerations. MEI reported a pre-tax loss of $4.2 million for the quarter, a reversal from prior year income.)

Net Loss

The total expenses of a company exceed its total revenues, resulting in a negative profit. (Represents the bottom-line profitability. MEI reported a net loss of $9.9 million for the quarter, worsening from a $1.6 million net loss in the prior year.)

Loss Per Share (Basic and Diluted)

The portion of a company's profit or loss allocated to each outstanding share of common stock. (Measures the profitability on a per-share basis. MEI's loss per share worsened to ($0.28) for the quarter.)

Cash and Cash Equivalents

Highly liquid investments with maturities of three months or less at the time of purchase. (Represents the company's most liquid assets. MEI's cash position increased to $118.5 million, despite operational losses.)

Net Cash Provided by Operating Activities

The net amount of cash generated from a company's normal business operations. (Indicates the company's ability to generate cash from its core business. MEI reported $17.7 million for the six months, a significant improvement from a negative figure in the prior year.)

Year-Over-Year Comparison

Compared to the prior year's filing, Methode Electronics Inc. has experienced a significant deterioration in its top-line performance, with net sales declining by 15.6% in the quarter and 11.5% year-to-date. This revenue contraction has led to a substantial swing from pre-tax income to a pre-tax loss of $4.2 million for the quarter, and a widening net loss to $9.9 million. While cash and cash equivalents have increased, this is primarily driven by improved operating cash flow generation, which is a positive sign amidst the overall negative financial trends.

Key Financial Figures

• $0.50 — nge on which registered Common Stock, $0.50 Par Value MEI New York Stock Exchan

Filing Documents

• mei-20251101.htm (10-Q) — 3151KB
• mei-ex31_1.htm (EX-31.1) — 15KB
• mei-ex31_2.htm (EX-31.2) — 15KB
• mei-ex32.htm (EX-32) — 12KB
• img75426078_0.jpg (GRAPHIC) — 14KB
• 0000065270-25-000016.txt ( ) — 13272KB
• mei-20251101.xsd (EX-101.SCH) — 1338KB
• mei-20251101_htm.xml (XML) — 3190KB

Financial Statements

Financial Statements Condensed Consolidated Statements of Operations (Unaudited) - Three and Six Months Ended November 1, 2025 and November 2, 2024 2 Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - Three and Six Months Ended November 1, 2025 and November 2, 2024 3 Condensed Consolidated Balance Sheets as of November 1, 2025 (Unaudited) and May 3, 2025 4 Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - Three and Six Months Ended November 1, 2025 and November 2, 2024 5 Condensed Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended November 1, 2025 and November 2, 2024 7 Notes to Condensed Consolidated Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 25 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 34 Item 4.

Controls and Procedures

Controls and Procedures 34 PART II. OTHER INFORMATION Item 1

Legal Proceedings

Legal Proceedings 35 Item 1A.

Risk Factors

Risk Factors 35 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35 Item 5. Other Information 35 Item 6. Exhibits 36

SIGNATURES

SIGNATURES 37 Table of Contents

FINANCI AL INFORMATION

PART I. FINANCI AL INFORMATION

Financ ial Statements

Item 1. Financ ial Statements METHODE ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED S TATEMENTS OF OPERATIONS (Unaudited) (in millions, except per share data) Three Months Ended Six Months Ended November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024 (13 Weeks) (14 Weeks) (26 Weeks) (27 Weeks) Net sales $ 246.9 $ 292.6 $ 487.4 $ 551.1 Cost of products sold 199.2 234.7 396.2 448.6 Gross profit 47.7 57.9 91.2 102.5 Selling and administrative expenses 39.0 42.6 75.6 88.8 Amortization of intangibles 5.8 5.9 11.6 11.8 Income from operations 2.9 9.4 4.0 1.9 Interest expense, net 5.7 6.2 11.6 11.0 Other expense, net 1.4 1.6 2.7 2.4 Pre-tax (loss) income ( 4.2 ) 1.6 ( 10.3 ) ( 11.5 ) Income tax expense 5.7 3.2 9.9 8.4 Net loss $ ( 9.9 ) $ ( 1.6 ) $ ( 20.2 ) $ ( 19.9 ) Loss per share: Basic $ ( 0.28 ) $ ( 0.05 ) $ ( 0.57 ) $ ( 0.56 ) Diluted $ ( 0.28 ) $ ( 0.05 ) $ ( 0.57 ) $ ( 0.56 ) Cash dividends per share $ 0.05 $ 0.14 $ 0.12 $ 0.28 See notes to condensed consolidated financial statements. 2 Table of Contents METHODE ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS O F COMPREHENSIVE INCOME (LOSS) (Unaudited) (in millions) Three Months Ended Six Months Ended November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024 (13 Weeks) (14 Weeks) (26 Weeks) (27 Weeks) Net loss $ ( 9.9 ) $ ( 1.6 ) $ ( 20.2 ) $ ( 19.9 ) Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 0.2 ( 0.5 ) 6.5 1.6 Derivative financial instruments 0.5 ( 0.9 ) 1.0 ( 2.6 ) Other comprehensive income (loss) 0.7 ( 1.4 ) 7.5 ( 1.0 ) Comprehensive loss $ ( 9.2 ) $ ( 3.0 ) $ (

View Full Filing

View this 10-Q filing on SEC EDGAR