Methode Electronics Inc Q4 2024 Earnings Call Transcript

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

Question: Luke Junk - Robert W. Baird & Co. - Analyst : Good morning. Thanks for taking the questions. First, maybe just a point of clarification on the fiscal '25 expectation for pretax income to be approaching breakeven, should we be thinking about that for fiscal '25 in aggregate and just basically trying to square the full year review versus the first quarter coming out of the gates kind of similar to where you were in the fourth quarter? Thank you.

Question: Luke Junk - Robert W. Baird & Co. - Analyst : Got it. Okay, that's helpful. Thank you. And then -- yeah, just relative to the flat outlook for sales roughly in fiscal '25, that would imply that you're going to be able to get over the top of the remaining product sunsets with launches, like you said is, launches especially stepping up in the fourth quarter. Can you just talk about guardrails that you have in place internally from an operational standpoint to make sure that those launches go smoothly for methods. And then just what you're hearing from customers in terms of timing, volumes, risk to take rates, or just risk of any push out in that view?

Question: Luke Junk - Robert W. Baird & Co. - Analyst : Got it. If I could ask on just balance sheet related items or I guess, more cash flow, really just any high-level expectations you can share for cash flow in the coming year and CapEx, we saw that come down quite a bit sequentially in the fourth quarter, just guardrails for CapEx in the coming year as well?

Question: Luke Junk - Robert W. Baird & Co. - Analyst : And then just lastly, if I can ask on capital allocation and near-term priorities beyond the CapEx, obviously that's required for the business. Thinking, especially just prioritization of debt paydown relative to share repurchase, which I guess maybe. It was a little surprising that there is some repurchase in the quarter and then just maintaining the dividend on a go-forward basis as well?

Question: Luke Junk - Robert W. Baird & Co. - Analyst : Got it. Okay. Thank you. I'll leave it there for now. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 11, 2024 / 3:00PM, MEI.N - Q4 2024 Methode Electronics Inc Earnings Call

Question: Saree Boroditsky - Jefferies - Analyst : Good morning and thanks for taking my questions. So I really appreciate through your guidance. I just want to understand, do you think about returning to growth in 2026? And how are you -- what's the underlying assumption for EV adoption? And how will that be impacted, if we do see a slower curve than expected?

Question: Saree Boroditsky - Jefferies - Analyst : Appreciate that commentary. That's sort of what I was getting at, obviously the focus is on improving profitability and maybe just building on that my last question, what is that opportunity as you can you size that cost savings opportunity as you go into fiscal 2026, maybe sourcing logistics and I assume from sales and administrative perspective.

Question: Saree Boroditsky - Jefferies - Analyst : Appreciate the question. Thank you guys.

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Yeah. Good morning all. Several questions here. First of all, Kevin, in what you're talking about with getting your costs under control and trying to fix the problems that are coming out of North American auto? I mean, are you -- I would assume that you are working in conjunction with Jon DeGaynor at this point in terms of at least some of these initial thrust that what you're trying to do to rectify some of the problems that you're having is that a correct assumption?

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. All right. So maybe for all of us because I still have a hard time understanding this. You're having the problems in Mexico, correct? That's where your problems are with North America and you have rolled out programs before in the past. What has changed so much that you're getting a lot of these operational efficiencies in Mexico at this point, that is causing the decline in the operating income generated by the automotive segment?

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. And I was just going through some of the past slides, but in aggregate, do you have what the business awards were in fiscal '24 in total and what -- how much of that dealt with electric vehicles.

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. And what you're doing with EVs, are you doing any programs for European manufacturers at this point, that for manufacturers that are producing in Europe and selling in Europe?

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : What about the Chinese manufacturers?

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. And then just last question. I'm just looking at some historical numbers here. I mean, your adjusted EBITDA margin was in the high teens in 2019, 2020 start to see drip in '21, '22. I mean, given the composition of the company now, do you think that once all of these issues are rectified that this becomes a mid to high teens EBITDA margin -- adjusted EBITDA margin business? Or is there something that has structurally changed here, that is causing the adjusted EBITDA margin to step down from where you were four or five years ago?

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. And then I realize you guys have had a lot on your plate over the last couple of months here and Ron, congratulations on retiring, I hope you enjoy yourself. Where are you -- I know you just filled the CEO search, but where are you on the CFO search side and what are some of the qualities you're looking for in a new CFO?

Question: Gary Prestopino - Barrington Research Associates, Inc. - Analyst : Okay. Thank you very much. Appreciate it.