Methode Electronics reported financial results for the third quarter of fiscal 2026 (ended January 31, 2026), posting a slight decline in revenue and a wider loss as challenges in its automotive business and restructuring initiatives weighed on profitability. Management emphasized that the company is progressing through a multi year transformation aimed at simplifying operations and strengthening its cost structure.
Revenue slightly lower year over year
For the third quarter of fiscal 2026, Methode Electronics reported:
Net sales: $233.7 million, down 2.6% YoY from $239.9 million.
The decline was primarily driven by lower sales volumes in the Automotive and Interface segments, partially offset by:
Higher volumes in the Industrial segment
Positive foreign currency translation effects.
Despite the year over year decline, revenue exceeded analyst expectations, which were around $220.8 million.
Earnings remain under pressure
Methode reported a wider net loss during the quarter.
GAAP results (Q3 FY2026)
Net loss: $15.9 million
Diluted EPS: $(0.45)
Prior-year comparison (Q3 FY2025)
Net loss: $14.4 million
EPS: $(0.41).
Adjusted results
Adjusted net loss: $13.1 million
Adjusted EPS: $(0.37) vs $(0.21) a year earlier.
The company’s EPS also missed consensus estimates of $(0.24) per share.
Profitability and margins
Gross profit: $38.8 million, down from $41.3 million last year.
Operating loss: $6.1 million, compared with a loss of $2.2 million in the prior year.
Operating performance weakened due to:
Lower automotive production volumes
Product mix changes
Ongoing restructuring and transformation costs.
Adjusted EBITDA
$7.3 million vs $12.3 million in the prior year quarter.
Segment performance
Automotive
Revenue: $106.2 million, down from $115.7 million.
Lower EV production volumes were the primary driver of the decline.
Industrial
Revenue: $122.5 million, up from $111.9 million.
Growth driven by higher demand for lighting products in off road equipment markets and power products.
Interface
Revenue: $5.0 million, down from $12.3 million.
Decline mainly due to reduced sales of touch panels for appliances.
The Industrial segment remained the strongest contributor to operating income during the quarter.
Cash flow and balance sheet
Operating cash flow: $15.4 million, down from $28.1 million last year.
Free cash flow: $10.1 million, compared with $19.6 million in the prior year quarter.
Debt levels increased slightly:
Total debt: $340.9 million, up from $317.6 million at fiscal year end 2025.
Net debt: $207.2 million, improved from $214.0 million previously.
Strategic transformation initiatives
Management highlighted several actions aimed at improving long term performance:
Agreement to sell the Harwood Heights, Illinois facility
Completion of the sale of the dataMate copper transceiver business for $16 million.
These steps are part of a broader restructuring plan focused on:
Simplifying the organization
Optimizing the manufacturing footprint
Strengthening operational discipline.
Outlook and guidance
Methode updated its FY2026 guidance:
Revenue: $950 million – $1.0 billion
Adjusted EBITDA: $58 million – $62 million.
The company expects foreign exchange to provide an approximately $30 million revenue tailwind during the year.
Key takeaways
1. Automotive segment remains a drag
Lower EV production volumes and weaker automotive demand continue to pressure revenue.
2. Industrial segment provides stability
Growth in off road equipment and power solutions helped offset declines elsewhere.
3. Transformation strategy ongoing
Asset sales and restructuring initiatives are aimed at improving margins and cost structure.
4. Profitability still challenged
Lower EBITDA and a wider net loss highlight ongoing operational headwinds.
Bottom line
Methode Electronics’ Q3 FY2026 results reflect mixed performance, with revenue slightly declining and losses widening due to automotive market weakness and restructuring efforts. However, growth in the Industrial segment and ongoing transformation initiatives suggest the company is repositioning its business for improved long term profitability.
To view the company’s previous earnings and latest concall transcripts, click here to visit the Alphastreet news channel.
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