Executive Summary

Q4 FY2024 results: net sales $277.3M, diluted EPS -$1.63; adjusted diluted EPS -$0.23 as goodwill impairment ($49.4M) and continued North America auto launch inefficiencies weighed on results .
Sequentially, sales rebounded vs Q3 ($259.5M) and free cash flow improved to $15.8M; net debt fell to $169.4M, the lowest level of the fiscal year .
Guidance reset: FY2025 “repositioning year” with net sales similar to FY2024 and adjusted pre-tax income approaching breakeven; FY2026 expected to deliver higher sales and notably positive pre-tax income .
Operational actions underway (sourcing, logistics, S&A reductions; asset monetization) and >$140M quarterly program awards; EV sales were 14% of Q4 revenue amid program roll-offs and softer demand .
Estimates context: S&P Global consensus data could not be retrieved due to a request limit; comparisons vs Street consensus are unavailable this cycle (S&P Global).

What Went Well and What Went Wrong

What Went Well

Free cash flow inflected positive ($15.8M) with the best quarter of the year for FCF and new awards; net debt reached the fiscal-year low at $169.4M .
Industrial segment revenue grew to $117.2M (vs. $98.0M YoY) with $21.8M contribution from Nordic Lights; Interface margin improved (10.6% op margin vs. 8.2% YoY) on mix .
Management initiated cost actions (sourcing, logistics, S&A), working capital reduction, non-core asset sales (incl. aircraft), and program launch focus to rebuild profitability .

What Went Wrong

Automotive segment revenue fell to $145.9M (down 21.6% YoY) and recorded a $49.4M goodwill impairment; operating loss -$64.9M driven by NA launch inefficiencies and lower volumes .
EV demand softness and a significant EV lighting program roll-off pressured sales; e-bike market remained overstocked, weighing Europe sensor volumes .
Higher interest expense and lower volumes further pressured EPS; Q4 diluted EPS -$1.63 (vs. $0.22 YoY), adjusted diluted EPS -$0.23 (vs. $0.22 YoY) .

Financial Results

Sequential performance (Q2–Q4 FY2024)

Metric	Q2 FY2024 (Oct 28, 2023)	Q3 FY2024 (Jan 27, 2024)	Q4 FY2024 (Apr 27, 2024)
Revenue ($M)	$288.0	$259.5	$277.3
Diluted EPS ($)	-$1.55	-$0.33	-$1.63
Adjusted Diluted EPS ($)	$0.06	-$0.33	-$0.23
EBITDA ($M)	-$36.7	$9.4	-$44.0
Adjusted EBITDA ($M)	$21.2	$9.5	$5.3
Net Cash from Ops ($M)	-$0.6	$28.8	$24.9
Free Cash Flow ($M)	-$11.3	$12.2	$15.8
Total Debt ($M)	$332.0	$331.3	$330.9
Net Debt ($M)	$209.5	$208.4	$169.4

Year-over-year (Q4 FY2023 vs. Q4 FY2024)

Metric	Q4 FY2023	Q4 FY2024
Revenue ($M)	$301.2	$277.3
Diluted EPS ($)	$0.22	-$1.63
Adjusted Diluted EPS ($)	$0.22	-$0.23
EBITDA ($M)	$21.9	-$44.0
Adjusted EBITDA ($M)	$31.7	$5.3

Segment breakdown (Q4 FY2024 vs. Q4 FY2023)

Segment	Net Sales Q4 FY2023 ($M)	Net Sales Q4 FY2024 ($M)	Op Inc Q4 FY2023 ($M)	Op (Loss) Q4 FY2024 ($M)
Automotive	$186.2	$145.9	$10.2	-$64.9
Industrial	$98.0	$117.2	$23.4	$20.0
Interface	$15.8	$14.2	$1.3	$1.5

KPIs and notable ratios

KPI	Q4 FY2024	Notes
EV & hybrid % of sales	14%	Down on program roll-off and lower EV demand
S&A as % of sales	15.0% (vs 16.6% YoY)	Reduced pro fees vs Nordic Lights costs in prior year
Free Cash Flow ($M)	$15.8	Best quarter of FY2024
Net Debt ($M)	$169.4	Lowest of fiscal year
Goodwill impairment ($M)	$49.4	North American Automotive reporting unit
Program awards	>$140M in Q4	Broad-based; EV-weighted

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	FY2025	Guidance suspended as of Q3 FY2024	Similar to FY2024	Reinstated; level set to flat
Adjusted Pre-tax Income	FY2025	N/A (suspended)	Approaching breakeven; H2 stronger; Q1 similar to Q4 FY2024 negative	New framework; back-end weighted
Depreciation & Amortization	FY2025	N/A	$60–$65M	Initial outlook provided
Net Sales	FY2026	N/A	Greater than FY2025	Up vs FY2025
Pre-tax Income	FY2026	N/A	Positive and notably greater than FY2025	Up vs FY2025
Dividend	Ongoing	$0.14 per share declared Jun 13, 2024	No change noted; Board determines quarterly	Maintained
Share Repurchase	Program	Prior $200M program expired Jun 14, 2024; 174,215 shares repurchased in Q4 for $3.0M	New authorization up to $200M through Jun 17, 2026	Renewed 2-year program

Note: In Q2 FY2024 the company had reduced FY2025 sales outlook to $1.15–$1.25B (from $1.25–$1.35B) and trimmed operating margin expectations; guidance was then suspended in Q3 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 FY2024; Q3 FY2024)	Current Period (Q4 FY2024)	Trend
EV demand and program cadence	Lower EV demand; revised FY2025 outlook; goodwill impairments; program roll-offs	EV % of sales 14%; transition gap with major EV lighting roll-off and wave of new EV power launches; pipeline healthy but EV-centric and timing-sensitive	Stabilizing near term softness; long-term tailwind
Automotive NA operations/launch inefficiencies	Ongoing NA operational inefficiencies raising costs (premium freight, labor); suspension of guidance	Inefficiencies persisted; cost actions underway; improvement efforts on Mexico launches; replacing legacy high-efficiency program adds complexity	Improving process; still a headwind
E-bike market	Overstocked in Europe, driving lower sensor sales	Ongoing overstock; continues to depress Europe volumes	Persistent headwind
Cost actions/WC/cash	Initiating cost/capex discipline, WC actions; returned to positive FCF in Q3	Best FCF quarter; asset sales (aircraft); focus on sourcing/logistics/S&A reduction	Improving cash discipline
Capital structure/covenants	Credit amendment raising leverage thresholds and fees; covenant waiver	Facility resized post-Q4; compliant; amendment provides runway	Reduced near-term covenant risk
Leadership transition	CEO change discussions; governance updates	Jon DeGaynor named CEO (eff. Jul 15); interim CEO and CFO transition	New leadership and strategy focus

Management Commentary

“Sales rebounded from the third quarter but were down from the prior year due to auto program roll-offs and ongoing demand weakness in the e-bike market… [and] operational inefficiencies in the Automotive segment… drove the adjusted net loss in the quarter.”
“We had our best quarter of the year for free cash flow and new program awards, while also delivering our lowest net debt level of the four reporting periods.”
“Fiscal 2025 will be a year of repositioning with flat organic sales growth and approaching breakeven pre-tax income… We then expect a return to organic sales growth and a notable pre-tax income improvement in fiscal 2026.”
Launch/cost focus: “We are undertaking initiatives to reduce costs, particularly in the areas of sourcing, logistics, and S&A… monetizing non-critical assets… improving low margin programs.”
Award momentum: “Over $140 million in annual program awards… strongest quarter for the year… pipeline remains healthy but… very EV centric.”

Discrepancy note: The call’s opening remark cited “sales for the quarter were $227 million,” which conflicts with reported net sales of $277.3M; CFO commentary and the press release confirm $277.3M .

Q&A Highlights

Cadence and breakeven path: FY2025 “approaching breakeven” for the year; Q1 FY2025 similar to Q4 FY2024 with improvement through the year and stronger H2 driven by launches and cost actions .
Roll-offs and launches: ~$90M rolled off in FY2024; a further ~$100M expected in FY2025, with launches refilling the pipeline; cost reductions (sourcing/logistics) to show more impact in H2 FY2025 .
Capex/cash flow: FY2025 capex to be similar to or higher than FY2024 to support >50 launches; working capital initiatives and non-core asset sales to support cash generation .
Capital allocation: Focus on deleveraging and balance sheet health over repurchases; dividend decided quarterly by the Board .
EV exposure and geography: Growth thesis remains EV-led into FY2026; customer/program diversification across U.S., Europe and Asia; limited exposure to Chinese OEMs .
Operations/Mexico: Launch discipline and processes improving; simultaneous replacement of a large, efficient legacy program with many smaller launches created temporary inefficiencies .

Estimates Context

S&P Global consensus estimates for Q4 FY2024 (EPS, revenue) were not retrievable due to a daily request limit at the data provider. As a result, we cannot present “vs. consensus” comparisons for this quarter (S&P Global).

Key Takeaways for Investors

FY2025 is an execution year: sequential improvement expected as launches scale and cost actions land; H2 weighting implies interim volatility .
Automotive NA launch normalization is the key swing factor for margins; management cites improved discipline and active cost programs, but timing remains critical .
EV pipeline remains a multi-year growth driver despite near-term demand variability and program timing; Q4 awards were robust and EV-weighted .
Cash discipline improving: positive FCF in Q3/Q4, asset monetization, and working capital focus; net debt reduced to $169.4M .
Covenant/LIQ risk moderated via credit amendments and facility resizing; compliance affirmed .
Leadership change (new CEO Jon DeGaynor) brings a transformation track record; expect continued portfolio/operations review and cost workstreams .
Watch for near-term catalysts: H2 FY2025 launch ramp quality, EV take rates, e‑bike inventory normalization, and additional cost take-out updates .

Appendix: Additional Context from Prior Quarters

Q3 FY2024: Net sales $259.5M; diluted EPS -$0.33; suspended forward guidance amid ongoing NA operational inefficiencies and market headwinds .
Q2 FY2024: Net sales $288.0M; diluted EPS -$1.55 with $56.5M goodwill impairment; reduced FY2025 sales and margin outlook; NA operational issues persisted .

METHODE ELECTRONICS INC (MEI)·Q4 2024 Earnings Summary