Methode Electronics, Inc.

Fourth quarter net sales increased 15.9% to $298.1 million. Full-year net sales decreased 2.8% to approximately $1 billion, or down 3% as management described it. Fourth-quarter gross profit increased to $72.2 million from $19.6 million; full-year gross profit increased to $202.2 million from $163.4 million. Fourth-quarter adjusted EBITDA was $26.9 million versus an adjusted EBITDA loss of $7.1 million; full-year adjusted EBITDA increased 60% to $68.2 million. Fourth-quarter adjusted net loss was $10.4 million, or $0.30 per diluted share; full-year adjusted net loss was $37.5 million, or $1.07 per diluted share. Free cash flow for the year was $15.6 million versus an outflow of $15.2 million in the prior year, capex was $22 million, and cash ended at approximately $140 million with net debt of $185 million, a 13% reduction. For fiscal 2021, guidance is for sales of $1.025 billion to $1.075 billion, adjusted EBITDA of $72 million to $82 million, EBITDA margin of about 7% to 7.6%, capex of $25 million to $30 million, free cash flow comparable to fiscal 2020, interest expense of $20 million to $22 million, income tax expense of $24 million to $26 million, and D&A of $58 million to $62 million.

Jonathan DeGaynor framed fiscal 2020 as a transformation year, emphasizing that the company has moved from fixing legacy issues toward growth. He said Methode has rebuilt leadership, strengthened controls, improved manufacturing execution, and simplified the portfolio, while focusing resources on higher-return areas like data centers, commercial vehicles, and electrification-related power solutions. His tone was constructive and confident, with repeated emphasis that the business is now better positioned for sustainable margin expansion and cash generation.

Laura Michele Kowalchik highlighted the main financial bridge: lower sales from program roll-offs and portfolio actions were more than offset in profitability by customer recoveries, operating improvements, and cost control. She cited the $45 million of customer recoveries, with about $23 million recognized as revenue in fiscal 2020 and roughly $25 million expected later through future production volumes and tooling reimbursements; she also noted about $7 million per year in cash payments for a portion of the recovery. She pointed to free cash flow of $15.6 million, capex down 46% to $22 million, and year-end cash of about $140 million with net debt of $185 million, while guiding to continued leverage reduction.

Analysts focused on the data center opportunity, automotive recoveries, commercial vehicle momentum, and the tax line. Management clarified that the fiscal 2021 data center guide is based on current bus-bar business into hyperscalers; the 800-volt architecture opportunity is not included in guidance yet. On automotive, management said most recovery activity is largely done, though some smaller customer discussions continue, and they reiterated that North American auto revenue should start recovering from the lows seen in fiscal 2020. They also said commercial vehicle represented about 10% of fiscal 2020 revenue and remains a good contribution-margin business, with Mexico playing a role in supporting growth across commercial vehicle and data center programs.