5 Revealing Analyst Questions From Methode Electronics's Q1 Earnings Call

Methode Electronics reported first quarter results that disappointed the market, as evidenced by a significant share price drop. Management attributed the underwhelming performance to unexpected inventory write-offs and continued challenges within its automotive programs. CEO Jon DeGaynor described the quarter as weighed down by “one-time, or historic in nature” items, including a $15 million inventory adjustment largely tied to delayed or canceled automotive and EV programs. DeGaynor was candid about the impact of these issues, citing operational improvements that were “largely masked” by these charges.

Is now the time to buy MEI? Find out in our full research report (it’s free).

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 Methode Electronics’s Q1 Earnings Call

• Luke Junk (Baird) asked about the feasibility of doubling EBITDA despite a $100 million sales decline; CEO Jon DeGaynor pointed to eliminated one-time costs and improved operational execution as key levers.

• Luke Junk (Baird) inquired about the risk of further EV launch delays and how management is mitigating these uncertainties; DeGaynor noted reliance on third-party forecasts and ongoing cost reductions to address potential disruptions.

• Gary Prestopino (Barrington) pressed for details on the inventory charges and reasoning for not adjusting these out of non-GAAP results; DeGaynor explained these were operational in nature and thus included in adjusted EBITDA.

• John Franzreb (Sidoti) questioned the expected mix of auto versus industrial sales going forward; DeGaynor indicated a strategic move toward a more balanced 50/50 split, with growth anticipated in data center and industrial segments.

• Gary Prestopino (Barrington) also sought clarification on the recent dividend reduction and its relation to covenant compliance; DeGaynor confirmed the cut aligns with peer yields and provides greater financial flexibility.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) the pace and quality of new program launches, particularly in data centers and the industrial segment, (2) the company’s ability to maintain cost discipline as it rightsizes operations and plant footprint, and (3) any signs of stabilization or renewed growth in EV demand. Outcomes from cost recovery efforts with automakers and progress on portfolio reviews will also be important markers of execution.

Methode Electronics currently trades at $6.48, down from $10.28 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).

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