Methode Electronics' third quarter was marked by continued operational challenges, with revenue declining notably year over year. Management attributed the sales contraction to ongoing headwinds in automotive and delayed program launches, particularly in the electric vehicle segment. CEO Jonathan DeGaynor highlighted that, “our EV exposure is not just in North America, it's in Europe and Asia,” and stressed the company has already absorbed much of the impact from canceled and delayed launches. The company’s efforts to improve plant performance, especially in Egypt and Mexico, helped deliver sequential improvements, but overall margin pressures persisted.
Is now the time to buy MEI? Find out in our full research report (it’s free for active Edge members).
Methode Electronics (MEI) Q3 CY2025 Highlights:
- Revenue: $246.9 million vs analyst estimates of $237.7 million (15.6% year-on-year decline, 3.9% beat)
- Adjusted EPS: -$0.19 vs analyst estimates of -$0.20 (in line)
- Adjusted EBITDA: $17.6 million vs analyst estimates of $15.27 million (7.1% margin, 15.2% beat)
- The company reconfirmed its revenue guidance for the full year of $950 million at the midpoint
- EBITDA guidance for the full year is $75 million at the midpoint, above analyst estimates of $73.53 million
- Operating Margin: 1.6%, down from 3.2% in the same quarter last year
- Market Capitalization: $241.5 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 From Methode Electronics’s Q3 Earnings Call
- Luke Junk (Baird) asked about the relative trends in data center versus EV sales and how Power Solutions results break down. CEO Jonathan DeGaynor clarified data center revenues are performing in line with expectations and EV headwinds have already been absorbed.
- Luke Junk (Baird) questioned whether the second half improvement will be driven by margins or volume. DeGaynor and CFO Laura Kowalchik explained that increased plant efficiency and margin conversion, especially in Egypt and Mexico, are key drivers for the expected improvement.
- John Franzreb (Sidoti & Company) pressed on whether management is comfortable with the lower or upper end of guidance, given ongoing volatility. DeGaynor noted continued caution, citing external risks like tariffs and supply chain turbulence as reasons for maintaining a wide guidance range.
- John Franzreb (Sidoti & Company) inquired about the drivers behind sequential improvements in industrial operating profit. DeGaynor attributed gains to improved plant performance and cost control, not just data center sales.
- Gary Prestopino (Barrington Research) asked for details on upcoming program launches and segment exposure. DeGaynor confirmed most new launches are power-related, covering both EV and hybrid applications, and are concentrated in Mexico and EMEA.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be closely monitoring (1) the ongoing operational improvements in Egypt and Mexico for sustainable margin expansion, (2) the success of data center Power Solutions and the vendor-managed inventory rollout as a potential growth offset to weaker automotive, and (3) any resolution or escalation of external risks such as tariffs or supply chain disruptions. We will also track the pace and profitability of new program launches across core segments.
Methode Electronics currently trades at $6.80, down from $8.69 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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