METHODE ELECTRONICS INC

Methode Electronics, Inc. is a leading global supplier of custom engineered solutions with sales, engineering, and manufacturing locations in North America, Europe, the Middle East, and Asia. The company designs, engineers, and manufactures mechatronic products for Original Equipment Manufacturers and tiered suppliers across mobility, industrial, and commercial markets. Its capabilities include power distribution, including busbars, smart connect systems, battery disconnect units, and integrated circuit boards, as well as user interface components, specialized LED lighting solutions, and sensor applications. Products are found in the end markets of transportation (including automotive, commercial vehicle, e-bike, aerospace, bus and rail), cloud computing and data center infrastructure, and construction equipment.

The markets in which Methode operates are highly competitive and characterized by rapid changes due to technological improvements and developments. The company competes with a large number of other manufacturers in each of its product areas, and many of these competitors have greater resources and sales. Price, service, and product performance are significant elements of competition. During fiscal 2026, the five largest customers accounted for approximately 41% ¹ of consolidated net sales, with one customer representing more than 10% of consolidated net sales at 10.9% ².

Methode generates revenue through the design, engineering, and manufacture of mechatronic products sold to OEMs and tiered suppliers, either directly or through channel partners and distributors. Sales activities are led by global and regional sales account managers supported by product application engineers and systems engineers, complemented by a network of independent sales representatives. The company's supply arrangements for each component part generally include a blanket purchase order and production releases, though customers are not required to purchase any minimum amount of products and can sunset a program at any time.

The Automotive segment supplies electronic and electro-mechanical devices and related products to automobile OEMs and their tiered suppliers across a broad range of vehicle platforms and powertrains. Capabilities include a full spectrum of vehicle systems from power distribution solutions, including busbars, smart connect systems, battery disconnect units, and integrated circuit boards, to user interface components, specialized LED lighting solutions, and advanced sensor applications. In fiscal 2026, the Automotive segment represented 45.9% ³ of net sales.

The Industrial segment manufactures exterior and interior lighting solutions, industrial safety radio remote controls, braided flexible cables, current-carrying laminated busbars and devices, custom power-product assemblies such as the PowerRail solution, high-current high-voltage flexible power cabling systems and powder-coated busbars used in various markets including aerospace, commercial vehicles, data centers, industrial equipment, military, power conversion, telecommunications and transportation. In fiscal 2026, the Industrial segment represented 51.4% ⁴ of net sales. The Interface segment provides high-speed digital communication over copper media solutions for the data networking and broadband markets, and user interface panel solutions for the appliance market, including copper transceivers, distribution point units, and solid-state field-effect consumer touch panels. In the fourth quarter of fiscal 2026, Methode divested its dataMate business, which was included in the Interface segment, and the consumer appliance business is winding down as programs roll-off. The Interface segment represented 2.7% ⁵ of net sales in fiscal 2026. The Medical segment, which was made up of the former medical device business Dabir Surfaces with its surface support technology aimed at pressure injury prevention, was discontinued; in the first quarter of fiscal 2024, the decision was made to initiate discontinuation, and in October 2023, certain assets of the Dabir Surfaces business were sold.

In the fourth quarter of fiscal 2026, Methode divested its dataMate business, which was included in the Interface segment. The company also sold certain assets of the Dabir Surfaces business in October 2023. As of May 2, 2026, the global workforce totaled approximately 6,650 ⁶ employees and 263 ⁷ contractors, with approximately 93.9% ⁸ of these employees and contractors located outside the U.S. The company has a $400 million ⁹ revolving credit facility that matures on October 31, 2027 ¹⁰. On June 24, 2026, subsequent to fiscal year end, the company amended its credit agreement. During fiscal 2026, the company repurchased shares under its buyback programs; the 2024 buyback program authorized repurchases up to a maximum amount. The aggregate market value of common stock held by non-affiliates on November 1, 2025 was $237.7 million ¹¹.

For the fiscal year ended May 2, 2026, total net sales were $713.163 billion ¹², compared to $680.985 billion ¹³ in fiscal 2025 and $680.985 billion ¹⁴ in fiscal 2024. Net income was $22.270 billion ¹⁵ in fiscal 2026, compared to $22.270 billion ¹⁶ in fiscal 2025. Diluted EPS was $2.73 ¹⁷ in fiscal 2026 versus $2.41 ¹⁸ in the prior year. The company's five largest customers accounted for approximately 41% ¹⁹ of consolidated net sales in fiscal 2026.

Methode is pursuing growth through its capabilities in power distribution, including busbars, smart connect systems, battery disconnect units, and integrated circuit boards, as well as user interface components, specialized LED lighting solutions, and sensor applications. The company's products serve end markets in transportation, cloud computing and data center infrastructure, and construction equipment. The data center market presents growth opportunities, though the filing notes risks including rapid technological change, customer concentration, and cyclical demand. The company has active development programs with various OEMs for a variety of products, though no assurance is given that products will be implemented in any particular vehicles.

The company is also focused on growth in the Industrial segment, which manufactures products used in aerospace, commercial vehicles, data centers, industrial equipment, military, power conversion, telecommunications, and transportation. The Interface segment provides high-speed digital communication solutions for the data networking and broadband markets, though the consumer appliance business is winding down as programs roll-off and the dataMate business was divested in the fourth quarter of fiscal 2026.

The filing discusses inflationary pressures that have affected wages, the cost and availability of components and materials, and the company's ability to meet customer demand. Methode has taken actions to mitigate the effects of inflation, including commercial negotiations with customers and suppliers, though these actions have not historically and may not in the future fully offset cost increases. The company expects to take additional restructuring actions which may include consolidating or closing facilities, moving production between geographic regions, and logistics and sourcing optimization measures, which could result in impairment charges and various charges for items such as idle capacity, disposition costs, and severance costs.

As of May 2, 2026, Methode's global workforce totaled approximately 6,650 ²⁰ employees and 263 ²¹ contractors, with approximately 93.9% ²² located outside the U.S. The company's primary sources of liquidity are cash generated from operations and availability under its $400 million ²³ revolving credit facility that matures on October 31, 2027 ²⁴. The company's senior secured credit agreement includes an anti-cash hoarding requirement providing that if cash on hand in the U.S. exceeds $65 million ²⁵ for 10 consecutive business days, the company shall prepay indebtedness by the amount of such excess.

Research and development costs primarily relate to product engineering and design and development expenses and are classified as a component of costs of products sold. The filing does not provide a specific R&D spending figure for the upcoming period. Capital expenditure plans are not explicitly quantified in the filing for the forward period. The company has share repurchase authorization under its 2024 buyback program, though the specific remaining authorization amount is not stated in the filing. The filing does not discuss a specific dividend policy or dividend amounts.

The company faces structural headwinds including changes in EV demand, which affected the business when certain OEMs significantly deferred or cancelled planned EV programs or reduced production volumes below previously quoted levels. The filing notes that starting 2025, the U.S. administration imposed extensive new tariffs on many countries where the company does business, including both broad and product-specific tariffs, prompting retaliatory measures from other nations, and global tariff levels have risen substantially above recent historical norms. The potential expiration, renegotiation, or modification of the USMCA, which is subject to a scheduled review in 2026 ²⁶ and may be extended if the parties agree, could result in increased tariffs, changes to rules of origin, new trade barriers, or other disruptions.

Additional constraints include the lengthy sales cycle for automotive and commercial vehicle products, which requires significant investment prior to reporting significant sales revenues, with no assurance that products will be implemented in any particular vehicle. The company also faces risks from rapid technological change in the data center market, customer concentration, and cyclical demand. Geopolitical tensions, including military conflict involving the United States, Israel, and Iran, could disrupt global oil and natural gas supply and shipping routes, leading to significant increases and volatility in fuel and energy costs.

Methode's business is highly dependent on the automotive, commercial vehicle, data center, and construction industries, and any adverse occurrence such as industry slowdowns, recession, rising interest rates, or changes in trade policy could materially affect results. The company faces significant exposure to changes in global trade policy, including extensive new tariffs imposed starting 2025 on many countries where it operates, which have raised global tariff levels substantially above recent historical norms and could increase cost of goods sold, decrease margins, and disrupt supply chains. The potential expiration or modification of the USMCA, subject to review in 2026 ²⁷, could result in increased tariffs and trade barriers affecting operations in Mexico and Canada. Customer concentration is a material risk, as the five largest customers accounted for approximately 41% ²⁸ of consolidated net sales in fiscal 2026, with one customer representing 10.9% ²⁹. The company has significant indebtedness under a $400 million ³⁰ revolving credit facility maturing October 31, 2027 ³¹, with variable rate exposure and financial covenants; non-compliance could result in acceleration of indebtedness, and the company has previously required waivers for non-compliance with covenants.

Management's message emphasizes the company's position as a leading global supplier of custom engineered solutions with capabilities in power distribution, user interface components, specialized LED lighting, and sensor applications. The filing highlights the company's focus on the Automotive, Industrial, and Interface segments, with the Medical segment discontinued. Management discusses the company's commitment to doing business with integrity, teamwork, and performance excellence, and emphasizes the importance of attracting and retaining talented employees. The forward-looking statements caution that actual results may differ materially due to numerous risks, including dependence on the automotive, commercial vehicle, data center and construction industries, changes in EV demand, changes in global trade policies including tariffs, and the company's ability to manage debt levels.