Methode Electronics Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: John E. Franzreb - Sidoti & Company, LLC - Analyst : Good morning, everyone, and thanks for taking the questions. I was wondering if you could quantify the impact of the extra week, not only on the top line but perhaps on operating results.

Question: John E. Franzreb - Sidoti & Company, LLC - Analyst : Okay, those drops down. Got it. And what cost control method measures impacted the second-quarter results beyond the deduction and freight costs? Was there anything else that had a positive impact on operating income?

Question: John E. Franzreb - Sidoti & Company, LLC - Analyst : Okay, fair enough. And of the $50 million in new orders, how much was that directly related to new programs in the EV market versus other markets?

Question: John E. Franzreb - Sidoti & Company, LLC - Analyst : Fair enough. And one last question, I'll get back into queue. In regards to the improvement in the data center market, can you quantify what kind

Question: John E. Franzreb - Sidoti & Company, LLC - Analyst : Okay. Fair enough. I'll get back to you. Thanks for taking the questions.

Question: Luke Junk - Robert W. Baird & Co. - Analyst : Great. Thank you for taking the questions and good morning. Wanted to circle back just to the pre-tax and can walk into the third quarter. Appreciate all of the things that you mentioned. I'm just wondering if there's anything else that we should be accounting for in terms of things that may have been temporary in the current quarter beyond the inventory reserve? Any impacts that we should think about from that extra week that have an outside bottom line impact either, Jon?

Question: Luke Junk - Robert W. Baird & Co. - Analyst : Okay. Then switching gears here. Wondering if you'd be able to comment just where we stand from a launch standpoint right now. In other words, you're anticipating 30 plus launches this year, just how many of those are already in motion versus what remains to execute. And maybe if you could just remind us of the waiting to Europe and risk of any launches flipping to the right geographically specifically.

Question: Luke Junk - Robert W. Baird & Co. - Analyst : I don't know if you're able to make any specific comments relative to [Stellantiss], but obviously a really important launch customer this year. Any color there would be great as well if possible.

Question: Luke Junk - Robert W. Baird & Co. - Analyst : Got it. And then lastly just on data center, a couple maybe clarifying items. One, can you just help us understand, within a 3% to 5% overall exposure, industrial segment versus interface. And then in terms of the really strong year-over-year growth, are you seeing any AI related impacts in that business, or would you say this is more core data center that's driving the improvement? Thank you.

Question: Luke Junk - Robert W. Baird & Co. - Analyst : Got it. I will go ahead and leave it there. Thank you.

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Thank you. Good morning, all. And welcome, Laura. A couple of questions initially, a little nitpicky. Interest expense looked like it was up sequentially almost a $1.4 million, was there any one-time expenses in that interest expense number or is that going to be the run rate at $6.2 million per quarter for the remainder of the year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 4:00PM, MEI.N - Q2 2025 Methode Electronics Inc Earnings Call

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. And then could you if, it was a -- you mentioned something about an inventory reserve reversal and interface, could you quantify that for us?

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. So $500,000, great. Thank you. So you mentioned one of the positive aspects of the quarter was premium freight costs are down substantially, which is great news. Have you reached a point here where you feel that your premium freight costs are now more normalized? Or is there still room to improve that that metric and if you could, could you maybe share how much premium freight was down?

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. That's all good news. I just want to talk about some of these program launches, but particularly with [Stellantis]. But first of all, beyond [Stellantis], could you maybe talk about where some of this new business is coming from? What OEMs?

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay, so let me ask a question. Let me put a question for you this way, Jon. I follow other companies that are dealing with the EV market. They put together their projections on what, at least some of the companies, on what they can do to that particular OEM, based on what the OEM is telling them they think their production levels are going to be. And then we're starting to see a slippage in the EV market, and obviously, those projections come down as we go through the year. So could you maybe are you -- could you maybe go through the sequence of how you're determining what your potential sales are going to be. I mean, you're taking the raw numbers from the OEM on what they think their production levels are or just give us some insight into that. Because it just appears to me that there's so many EVs coming out in the market, but they're not really getting purchased as quickly as they had been in the past.

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. That's very helpful. Thank you.

Question: John E. Franzreb - Sidoti & Company, LLC - Analyst : Yeah. I'm just curious, is there any changes in your commercial vehicle assumptions in the coming year versus three months ago?

Question: John E. Franzreb - Sidoti & Company, LLC - Analyst : Okay. And you touched on Mexico a few seconds ago. Where are we in that process of fixing the operations in Monterrey? Is that behind us? So how much more is there to go? Can you talk through what's going on there?

Question: John E. Franzreb - Sidoti & Company, LLC - Analyst : Yeah, it's a start. I get it. Fair enough. And one other question, your reduction in the CapEx spending. Does that represent just lower required spending or change in the timing of that spending from this year to next year?

Question: John E. Franzreb - Sidoti & Company, LLC - Analyst : All right. And I guess one last question to bother everybody here. The cash outflow was kind of sizable in the quarter. Will we be able to recapture that with cash inflows by the end of the fiscal year or will be a net cash outflow year?

Question: John E. Franzreb - Sidoti & Company, LLC - Analyst : Fair enough. Perfect. Thank you very much.