Filing update · Methode Electronics (MEI)

Methode Electronics grows sales again, but cash went out the door and the credit line is due in 2027

Methode grew fiscal first-quarter 2027 sales 10.4% to $265.4 million on data center and lighting demand, yet lost $11.4 million, saw adjusted EBITDA margin fall to 5.2% and burned $10.9 million of free cash flow. Its $400 million revolver matures in October 2027, and it has needed covenant waivers before.

Published
October 24, 2026
Data through
August 1, 2026
Latest filing used
October 23, 2026
Key numbers
Net sales, Q1 FY27
$265.4M
Up 10.4% from a year earlier [3]
Adjusted EBITDA margin
5.2%
From 6.5% a year earlier [3]
Free cash flow
−$10.9M
Against +$18.0M a year earlier [3]
Credit line matures
Oct 2027
$400 million revolver [4]
What changed

Methode Electronics, a maker of automotive and industrial components, is trying to replace electric-vehicle business that has shrunk with data center and power products. The first quarter of fiscal 2027 showed the growth arriving, but not yet the profit or the cash.

  • Net sales rose 10.4% to $265.4 million [2], led by Industrial, up 27.0% to $156.8 million [3].
  • Net loss was $11.4 million, or $0.32 a share, against $10.3 million [3].
  • Adjusted EBITDA fell to $13.7 million, 5.2% of sales, from $15.7 million and 6.5% [3].
  • Cash: operating cash flow was an outflow of $7.8 million and free cash flow negative $10.9 million [3].
  • Guidance for fiscal 2027 was affirmed [3].
  • Since then: on October 23 Methode filed a report under the item for director and officer changes [1].
The trajectory

Sales fell through most of fiscal 2026 as EV programmes were cut, jumped in the fourth quarter on recoveries, and are now growing again on Industrial demand.

Charts: net sales
Net sales
$0M$100M$200M$300MQ1 FY26: $241M$241MQ1FY26Q2 FY26: $247MQ2FY26Q3 FY26: $234MQ3FY26Q4 FY26: $298MQ4FY26Q1 FY27: $265M$265MQ1FY27

Five fiscal quarters as Methode reported them; its fiscal year ends in late April or early May. Q4 FY26 sales include $22.5 million of customer recoveries. Hover over or tab to a column for its value.

The numbers and their sources
Quarter Net sales
Q1 FY26 $240.5M [2]
Q2 FY26 $246.9M [9]
Q3 FY26 $233.7M [7]
Q4 FY26 $298.1M [5]
Q1 FY27 $265.4M [2]
Margins went backwards

Gross margin was flat while selling and administrative costs rose sharply, so adjusted EBITDA margin fell.

Chart: Margins and overhead, first quarter
Margins and overhead, first quarter
0%5%10%15%20%Gross margin: Q1 FY26 18.1%, Q1 FY27 18%18%Gross marginSelling & admin: Q1 FY26 15.2%, Q1 FY27 17.3%17.3%Selling & adminAdjusted EBITDA margin: Q1 FY26 6.5%, Q1 FY27 5.2%5.2%Adjusted EBITDA margin
As a percentage of net sales, as Methode reported them [2] [3]. Adjusted EBITDA is a non-GAAP measure.
Show the numbers
ItemQ1 FY26Q1 FY27
Gross margin18.1%18%
Selling & admin15.2%17.3%
Adjusted EBITDA margin6.5%5.2%
A moving target

Methode's adjusted EBITDA guidance has swung widely over the past year.

Chart: Adjusted EBITDA: guidance and results, $ millions
Adjusted EBITDA: guidance and results, $ millions
$0M$20M$40M$60M$80MFY26 guide (Dec): $75M*$75M*FY26 guide (Dec)FY26 guide (Mar): $60M*$60M*FY26 guide (Mar)FY26 actual: $68M$68MFY26 actualFY27 guide: $77M*$77M*FY27 guide
  • Guide values are midpoints of the ranges Methode gave: $70 to $80 million in December 2025 [9], $58 to $62 million in March 2026 [7], and $72 to $82 million for fiscal 2027 [5], affirmed in September [3] (calculated). Fiscal 2026 actual as reported [5].
Show the numbers
ItemFiscal year
FY26 guide (Dec)$75M*
FY26 guide (Mar)$60M*
FY26 actual$68M
FY27 guide$77M*
Anomalies worth a closer look

Five things in the filings that complicate the return to growth.

Anomalies (5)
Two ways to read it

The same filings support two different conclusions. We set out both; this is not a view on whether to buy or sell the stock.

The two readings

The case that the portfolio shift is starting to work

On this reading Methode is moving from shrinking EV programmes to data center and power markets, and the growth is real.

  1. 01
    Growth is back
    Sales rose 10.4% to $265.4 million [2] after falling 2.8% in fiscal 2026 [5].
  2. 02
    Industrial is booming
    Industrial sales rose 27.0% to $156.8 million on data center, on-highway and off-highway lighting demand [3].
  3. 03
    New business is being won
    Methode booked non-data center awards worth about $75 million of peak annual revenue, or about $400 million over their lives [3].
  4. 04
    The guide was affirmed
    Management affirmed fiscal 2027 guidance of $1.025 billion to $1.075 billion of sales and $72 million to $82 million of adjusted EBITDA [3] [5].
  5. 05
    A regulatory overhang lifted
    The SEC staff concluded its investigation in May 2026 without recommending enforcement action [4].

The case that profit and cash are still going the wrong way

On this reading growth is coming at the expense of margins and cash, ahead of a debt maturity.

  1. 01
    Lower margin on higher sales
    Adjusted EBITDA margin fell to 5.2% from 6.5% [3].
  2. 02
    Negative cash flow
    Free cash flow was negative $10.9 million [3].
  3. 03
    Refinancing risk
    The revolver matures in October 2027, and Methode has needed covenant waivers before [4].
  4. 04
    EV programmes keep shrinking
    Electric-vehicle adoption has been slower than expected and customers have shifted their EV strategies [2]; automotive fell to 45.9% of fiscal 2026 sales from 53.7% two years earlier [4].
  5. 05
    Concentrated customers
    Five customers were about 41% of fiscal 2026 sales, one of them 10.9% [4].
Hypotheses: short, medium and long term

Testable statements, each with what would support or contradict it and when the next evidence arrives. Thresholds marked "our marker" are ours, not Methode's.

Hypotheses (3)
  1. Short termH1
    Next quarter: Q2 FY27 results

    Adjusted EBITDA margin recovers toward the full-year guide

    The guide implies roughly $19 million to $23 million of adjusted EBITDA a quarter for the rest of the year (calculated), against $13.7 million in the first [3].
    What would support it
    Second-quarter adjusted EBITDA above $18 million (our marker) with positive free cash flow.
    What would contradict it
    Adjusted EBITDA flat or down from the first quarter, or another quarter of negative free cash flow.
    Next check: Q2 FY27 results, likely early December 2026 (last year's came on December 3 [9]).
  2. Medium termH2
    Next 12 months

    Methode refinances its revolver well before the 2027 maturity

    The $400 million facility matures on October 31, 2027 [4].
    What would support it
    An amended or new facility on similar terms announced in fiscal 2027, with no covenant waiver needed.
    What would contradict it
    A waiver request, tighter terms or a higher cost of borrowing.
    Next check: Each quarterly report, and any credit agreement filing.
  3. Long termH3
    Three years and more

    Data center and power products replace lost EV volume

    Methode is increasing its exposure to data centers, vehicle electrification and power solutions [5] after about $100 million of annual sales were lost to weaker EV demand [9].
    What would support it
    Industrial growing to well over half of sales with adjusted EBITDA margin above 9% (our marker), its fourth-quarter fiscal 2026 level [5].
    What would contradict it
    Industrial growth fading while automotive keeps shrinking.
    Next check: Each annual report.
Risks and contrary evidence
  • Tariffs and trade. With plants in Canada, China, Egypt, Europe and Mexico, tariffs could raise input costs and pressure margins [2], and changes to the USMCA could raise production costs [4].
  • EV demand. Slower EV adoption may leave capacity underused [2].
  • Middle East. Conflict could disrupt supply chains and raise energy and transport costs [2].
  • Litigation. A securities class action was dismissed but refiled with a second amended complaint [4].
  • Impairment. Goodwill and intangibles could be written down if the recovery stalls [4].
What would change the view
  • Two consecutive quarters of positive free cash flow with adjusted EBITDA margin above 7% (our marker).
  • An early refinancing of the revolver on comparable terms.
  • A cut to fiscal 2027 guidance, which would put the refinancing under pressure.
Next check

Second-quarter fiscal 2027 results. Last year's came on December 3, 2025 [9], so expect the next update in early December 2026.

How this report was made

Every figure comes from Methode Electronics' own SEC filings, listed below; no market prices or third-party data were used. Statements were extracted from the filings with the help of an AI model, each quoted passage was matched against the filing text, and this report was written by Claude (Anthropic) from that evidence. Every figure was checked against the quoted filing text before publication. Figures marked "calculated" are simple arithmetic on reported numbers.

AI-Inflect screen

The deterministic screen's current reading for this company, market data through October 23, 2026. It is separate from the filing analysis above and can change daily; it is not a view on the stock. Open in AI-Inflect

Stage and setup
Stage
Watch
Fundamentals
Improving
Inflection type
Multi factor inflection
Technical setup
Base building
Sector
Software tech
Condition matrix · 5 true, 12 false, 0 unknown
  • Revenue growth positiveTrue
  • Revenue growth improvingTrue
  • Revenue growth acceleratingFalse
  • Revenue zero-crossing (loss→growth)False
  • Revenue improved 2 straight qtrsFalse
  • Revenue improved 3 straight qtrsFalse
  • Revenue improved 4 straight qtrsFalse
  • EPS improvingTrue
  • EPS loss→profit crossingFalse
  • Earnings acceleratingFalse
  • Gross margin expandingTrue
  • Operating margin expandingTrue
  • Operating leverageFalse
  • FCF improvingFalse
  • FCF negative→positive crossingFalse
  • FCF margin expandingFalse
  • Cash conversion improvingFalse
Sources

Company filings with the U.S. Securities and Exchange Commission (SEC).

  1. [1]Current report (item 5.02), October 2026 · Form 8-K, filed October 23, 2026 · accession 0000065270-26-000058
  2. [2]Quarterly report, quarter ended August 1, 2026 (Q1 fiscal 2027) · Form 10-Q, filed September 2, 2026 · accession 0000065270-26-000045
  3. [3]First-quarter fiscal 2027 earnings release · Form 8-K, filed September 2, 2026 · accession 0000065270-26-000044
  4. [4]Annual report for fiscal 2026 · Form 10-K, filed June 24, 2026 · accession 0000065270-26-000031
  5. [5]Fourth-quarter fiscal 2026 earnings release · Form 8-K, filed June 24, 2026 · accession 0000065270-26-000030
  6. [6]Quarterly report, quarter ended January 31, 2026 · Form 10-Q, filed March 5, 2026 · accession 0000065270-26-000007
  7. [7]Third-quarter fiscal 2026 earnings release · Form 8-K, filed March 5, 2026 · accession 0000065270-26-000005
  8. [8]Quarterly report, quarter ended November 1, 2025 · Form 10-Q, filed December 3, 2025 · accession 0000065270-25-000016
  9. [9]Second-quarter fiscal 2026 earnings release · Form 8-K, filed December 3, 2025 · accession 0000065270-25-000015

This report is general information and education, not a recommendation to buy or sell any security and not personalised financial advice. It follows our editorial principles: every figure traces to the sources above, and figures we calculated are marked as such.

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