NYSE:MEI
METHODE ELECTRONICS INC
A specialized manufacturer of advanced electronic interconnects facing recent profitability headwinds while maintaining significant cash reserves.
Key Metrics
Investment Thesis
Bull Case
The company holds a robust balance sheet with over $100M in cash and equivalents, offering a potential turnaround story if operational losses can be curbed. Strong non-cash adjustments suggest underlying asset value that may not yet be reflected in the net income figure.
Bear Case
Consecutive years of negative net income combined with a shrinking revenue base creates significant downside risk for shareholders. The company's operating profit turned negative at $-23.9M, indicating that core business operations are currently burning cash despite some financing inflows.
About METHODE ELECTRONICS INC
Methode Electronics Inc. provides electronic components and assemblies primarily serving the aerospace, defense, and industrial markets with a focus on high-reliability connectivity solutions.
Analysis
Management Discussion
Despite generating positive operating cash flow of $26.4M, the company reported a net loss of $62.6M for 2025, reflecting a sharp deterioration from profits in 2023 to losses in 2024 and 2025. Revenue has contracted sequentially from $1.18B in 2023 to $1.05B in 2025, while the significant increase in accounts receivable relative to cash burn warrants close monitoring of collection efficiency.
Industry Overview
The aerospace and defense electronics sector is characterized by high technical barriers and long product lifecycles but offers stable, albeit cyclical, demand driven by national security requirements.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $1.18B | $1.11B | $1.05B |
| Cost of Revenue | $915.5M | $935.7M | $884.7M |
| Gross Profit | $264.1M | $178.8M | $163.4M |
| Operating Expenses | $173.7M | $290.8M | $187.3M |
| Operating Income | $90.4M | $-112.0M | $-23.9M |
| R&D | $35.0M | $49.1M | $41.8M |
| G&A | $154.9M | $160.9M | $163.9M |
| Stock-Based Comp | $11.5M | $3.6M | $7.4M |
| D&A | $49.5M | $57.9M | $58.5M |
| Depreciation | $30.7M | $33.9M | $35.1M |
| Amortization | $18.8M | $24.0M | $23.4M |
| Other OpEx | $-16.2M | $80.8M | $-18.4M |
| Non-Operating Income | $-300.0K | $-16.1M | $-26.2M |
| Pre-Tax Income | $90.1M | $-128.1M | $-50.1M |
| Income Tax | $13.0M | $-4.8M | $12.5M |
| Continuing Ops | $77.1M | $-123.3M | $-62.6M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $77.1M | $-123.3M | $-62.6M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $77.1M | $-123.3M | $-62.6M |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Current Assets | $664.4M | $637.7M | $559.9M |
| Cash & Equivalents | $157.0M | $161.5M | $103.6M |
| Accounts Receivable | $314.3M | $262.6M | $241.0M |
| Inventory | $159.7M | $186.2M | $194.1M |
| Prepaid Expenses | $20.5M | $18.7M | $17.1M |
| Other Current Assets | $12.9M | $8.7M | $4.1M |
| Long-Term Assets | $914.7M | $765.8M | $745.9M |
| PP&E (Net) | $220.3M | $212.1M | $221.6M |
| Intangibles | $256.7M | $256.7M | $238.4M |
| Goodwill | $301.9M | $169.9M | $172.7M |
| Operating Leases | $28.4M | $26.7M | $23.7M |
| Other LT Assets | $107.4M | $100.4M | $89.5M |
| Total Assets | $1.58B | $1.40B | $1.31B |
| Current Liabilities | $228.0M | $231.4M | $233.2M |
| Accounts Payable | $138.7M | $132.4M | $125.9M |
| Current Debt | $3.2M | $200.0K | $200.0K |
| Current Leases | $6.8M | $6.7M | $7.4M |
| Taxes Payable | $8.1M | $8.1M | $17.5M |
| Other Current Liab | $71.2M | $84.0M | $82.2M |
| Long-Term Liabilities | $398.2M | $406.1M | $379.3M |
| Long-Term Debt | $303.6M | $330.7M | $317.4M |
| LT Operating Leases | $21.8M | $20.6M | $18.2M |
| Other LT Liab | $56.1M | $45.5M | $43.7M |
| Total Liabilities | $626.2M | $637.5M | $612.5M |
| Shareholders' Equity | $952.9M | $766.0M | $693.3M |
| Paid-In Capital | $181.0M | $183.6M | $191.8M |
| Retained Earnings | $772.7M | $612.3M | $524.2M |
| AOCI | $-19.0M | $-36.7M | $-29.8M |
| Treasury Stock | $11.5M | $11.5M | $11.5M |
| Total L&E | $1.58B | $1.40B | $1.31B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $77.1M | $-123.3M | $-62.6M |
| Non-Cash Adjustments | $-20.4M | $174.6M | $108.1M |
| Working Capital Changes | $76.1M | $-3.8M | $-19.1M |
| Cash from Operations | $132.8M | $47.5M | $26.4M |
| Capital Expenditures | $42.0M | $50.2M | $41.6M |
| Cash from Investing | $-153.1M | $-17.5M | $-32.9M |
| Share Buybacks | $48.1M | $13.7M | $1.6M |
| Dividends Paid | $19.8M | $19.9M | $20.4M |
| Cash from Financing | $3.2M | $-18.9M | $-58.9M |
| FX Effect | $2.1M | $-6.6M | $7.5M |
| Net Change in Cash | $-15.0M | $4.5M | $-57.9M |
| Beginning Cash | $172.0M | $157.0M | $161.5M |
| Ending Cash | $157.0M | $161.5M | $103.6M |
Frequently Asked Questions
How does METHODE ELECTRONICS INC make money?
The company generates revenue through the design and fabrication of printed circuit boards, wire harnesses, and custom electronic assemblies tailored for rigorous aerospace and defense applications.
What are the main risks for MEI?
Persistent net losses indicating underlying profitability challenges; declining revenue trend over the last three years suggesting potential market saturation or demand shifts; heavy reliance on specific high-barrier industries vulnerable to budget cuts; significant accumulated retained earnings deficit impacting equity stability.
What is MEI's competitive advantage?
Specialized expertise in high-reliability components for critical aerospace sectors; established supplier relationships with major defense contractors requiring long-term contracts; substantial cash on hand providing flexibility during downturns.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.