Methode Electronics, Inc., a global manufacturer of custom-engineered electronic and electromechanical components and assemblies, has reported its first-quarter fiscal 2027 earnings. The company's sales rose 10.4% to $265.4 million, driven by a 27% increase in industrial revenue from data-center power distribution and off-road lighting. Despite this growth, Methode reported an adjusted net loss of $7.7 million, or $0.22 per diluted share.
Industrial Segment Drives Quarterly Growth
The industrial segment was the main contributor to Methode's quarterly growth, with sales increasing 27% to $156.8 million. This growth was fueled by continued demand for data center power-distribution products and off-road lighting solutions. The segment's operating income rose 19% to $31.6 million, helped by higher sales volume and mix, customer recoveries, and operational improvements.
Operational Restructuring Efforts Underway
Methode is pursuing broad operational restructuring and footprint consolidation, including cost reductions in Mexico, production transfers from Asia, China site consolidation, and facility exits in the U.K. and Germany. Management cited significant margin improvements in Mexico, Egypt, and Malta. The company has implemented new leadership, operating procedures, and structural cost reductions in Mexico, which has resulted in more than 500 basis points of year-over-year margin improvement in the first quarter.
New Awards and Manufacturing Footprint
Methode has booked new awards representing $75 million of peak annual revenue and approximately $400 million in estimated lifetime revenue. The majority of the awards are with new automotive customers for hybrid vehicle applications, rather than pure EV programs. All of the automotive awards are expected to be manufactured in North America, primarily in Mexico. Management attributed the awards to customers reassessing supply chains amid tariff exposure, lead-time considerations, and quality requirements.
Guidance and Outlook
Methode reaffirmed its fiscal 2027 guidance for net sales of $1.025 billion to $1.075 billion and adjusted EBITDA of $72 million to $82 million, implying an adjusted EBITDA margin of about 7% to 7.6%. The company continues to expect free cash flow comparable with fiscal 2026. Methode also announced plans to hold an investor day on Dec. 17 at the New York Stock Exchange.
Key Takeaways and What to Watch Next
Methode Electronics' first-quarter earnings report highlights the company's operational restructuring efforts and its commitment to improving profitability. The industrial segment's growth and the company's new awards in the automotive sector are positive indicators for the company's future performance. However, the adjusted net loss and decline in adjusted EBITDA are areas of concern. Investors will be watching to see how Methode executes its operational restructuring plans and whether the company can meet its fiscal 2027 guidance.
