Methode Electronics Inc Q3 2025 Earnings Call Transcript

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

Question: John Franzreb - Sidoti & Company, LLC - Analyst : I guess, I'd like to start with the quarter in and of itself. When you look at the drop in the revenue profile, especially in light of what maybe some of the anticipation in the lower volume in the EV and Hybrid sector, what surprised you really the most about the drop in volumes?

Question: John Franzreb - Sidoti & Company, LLC - Analyst : And how does that program rollout will -- look today in light of those changes and the confidence level you have that they will continue to roll out at the pace you anticipate over the coming, say, six months?

Question: John Franzreb - Sidoti & Company, LLC - Analyst : Understood. And I guess you talked about you've executed some pricing actions. I'm curious how that stands. Are there still other repricing opportunities? Or is that program completed?

Question: John Franzreb - Sidoti & Company, LLC - Analyst : Okay. And you mentioned data centers is a bright spot. What -- how much is data center as a percentage of revenue at this point?

Question: John Franzreb - Sidoti & Company, LLC - Analyst : Okay. And one last question, I'll get back into queue. Can you give us some updated thoughts on what you're seeing in the Class 8 truck market and how that's impacted your thoughts on guidance?

Question: John Franzreb - Sidoti & Company, LLC - Analyst : Jon, just on that topic, most people think that's a first half calendar year weighted event as far as the drop in the Class 8 market. Is that how you view it? Or do you think it's going to be flatter, down? Again, I don't want to put words in your mouth. Yes.

Question: Luke Junk - Robert W. Baird & Co. - Analyst : Jon, maybe to start with, can you just help us unpack the sequential margin momentum in automotive segment margins this quarter? Looking -- we saw some improvement in the first half of the year, and now they're kind of back where they were in the back half of '24, roughly speaking. And I understand there's a lot of moving pieces and that there's not direct comparability there. But can you just help bucket some of the factors there in terms of overall industry volumes, take rates on EV and now with those programs fully sunsetted, any kind of overhead considerations related to that as well?

Question: Luke Junk - Robert W. Baird & Co. - Analyst : Appreciate the color there. Second, typically include some color on awards and the slides -- weren't in the slides this quarter. Any color on current quarter awards and maybe just the industry backdrop as well relative to auto headwinds, EV moderation, et cetera?

Question: Luke Junk - Robert W. Baird & Co. - Analyst : Yes. And just on the high single-digit growth expectation, did you say, Jon, that you're excluding the appliance sunset? Did you say that you think that non core essentially reach fruition? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2025 / 4:00PM, MEI.N - Q3 2025 Methode Electronics Inc Earnings Call

Question: Luke Junk - Robert W. Baird & Co. - Analyst : Got it. And then lastly, I know that you're not including tariffs in the guidance, but just given your manufacturing presence in Mexico, anything you can share around preliminary customer discussions and maybe what your approach might be prospectively should those actually come into effect in April?

Question: Gary Prestopino - Firm Analyst Barrington Research Associates, Inc. - Analyst : Jon, I was -- I'm looking at this bridge here. And I was looking at some historical charts that -- from prior bridges. And way back when at the beginning of the year or whatever, were you anticipating about $84 million of Stellantis program launch sales for this year? And then something like $125 million in fiscal '26. Is that correct?

Question: Gary Prestopino - Firm Analyst Barrington Research Associates, Inc. - Analyst : So these programs have been delayed. I know Stellantis has canceled some model rollouts. Has anything been canceled on you? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2025 / 4:00PM, MEI.N - Q3 2025 Methode Electronics Inc Earnings Call

Question: Gary Prestopino - Firm Analyst Barrington Research Associates, Inc. - Analyst : Were all your launches with Stellantis EVs? Or were they spread out on ICE vehicles, too?

Question: Gary Prestopino - Firm Analyst Barrington Research Associates, Inc. - Analyst : Hybrid. Okay. Okay. All right. So you've channeled those down pretty significantly. Do you think a lot -- I mean, the market, obviously, for EVs has been challenging versus where it was a year ago or two years ago. But does some of this impact come from the change of leadership at Stellantis since Tavares is no longer there, and you've got some new players in there running the company?

Question: Gary Prestopino - Firm Analyst Barrington Research Associates, Inc. - Analyst : Okay. Then just two other quick questions. Looking at the slide with transformation update and then talking about initial exploration of non-transportation power, industrial lighting, industrial unit user interface. Do you rely on your segment heads to be the impetus or the initial, like for lack of a better word, spotter of these opportunities? Or do you have your own in-house corp fin that's out there actively looking for acquisitions?

Question: Gary Prestopino - Firm Analyst Barrington Research Associates, Inc. - Analyst : Okay. Just one last quick one, real easy answer. Laura, are there any issues on the covenants of your debt with buying back stock since your stock is down pretty precipitously here?

Question: John Franzreb - Sidoti & Company, LLC - Analyst : Yes. I'm actually just curious, we haven't talked about Nordic Lights in quite some time. And if you could kind of give an update on how that acquisition is performing relative to the expectations when it was acquired over a year ago?

Question: John Franzreb - Sidoti & Company, LLC - Analyst : Okay. And it's not being weighed down by what we're seeing in Europe more so than you anticipated or just context maybe? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2025 / 4:00PM, MEI.N - Q3 2025 Methode Electronics Inc Earnings Call

Question: John Franzreb - Sidoti & Company, LLC - Analyst : That's good news.