Methode Electronics swings to profit on recoveries
The auto-parts supplier posted $22.5 million in customer recoveries in its fiscal fourth quarter.
Methode Electronics (MEI) returned to profitability in its fiscal fourth quarter, reporting net income of $0.4 million after four consecutive quarters of losses. The auto-parts and industrial-components supplier said the turnaround was driven by $22.5 million in customer recoveries in its Automotive segment, a first-time disclosure that reversed a year-long sales decline.
The quarter marked a sharp inflection after three periods of double-digit revenue drops. Net sales rose 15.9% year-over-year to $298.1 million, accelerating from a 2.6% decline in the prior quarter and a 15.6% drop in the second quarter of fiscal 2026. Gross profit nearly doubled to $72.2 million, lifting the margin to 24.2% from 16.6% in the third quarter and 7.6% a year earlier.
Income from operations swung to $10.9 million from a $6.1 million loss in the prior quarter and a $23.6 million loss in the year-ago period, the first quarterly profit since the second quarter of fiscal 2025. Adjusted EBITDA rose to $26.9 million, or 9.0% of sales, up from $7.3 million in the third quarter and a $7.1 million loss in the prior-year quarter.
The Automotive segment led the rebound, with net sales jumping 28.3% year-over-year to $144.9 million after an 8.2% decline in the third quarter. Operating income turned positive at $6.0 million, or 4.1% of segment sales, compared with a $12.7 million loss in the prior quarter. The Industrial segment also strengthened, with sales rising 14.2% to $151.4 million and operating income climbing to $33.6 million, or 22.2% of sales. The Interface segment, meanwhile, saw revenue collapse to $1.8 million from $5.0 million in the third quarter after the sale of the dataMate business.
For fiscal 2027, Methode raised its guidance, projecting net sales of $1.025 billion to $1.075 billion, up from a prior range of $950 million to $1.0 billion, and adjusted EBITDA of $72 million to $82 million, compared with a previous outlook of $58 million to $62 million. The company said the revisions reflected improved visibility and operational momentum.
Net debt declined to $185.4 million at fiscal year-end from $207.2 million in the third quarter and $214.0 million at the end of fiscal 2025, supported by free cash flow generation and working capital improvements. Full-year free cash flow improved to $15.6 million from a $15.2 million outflow in fiscal 2025, though the fourth quarter saw a $0.9 million outflow after $10.1 million of inflows in the third quarter.
Methode also disclosed that it had closed the sale of the dataMate business in the quarter, removing a $16 million revenue stream from its Interface segment.