Methode Electronics Inc (MEI) 2025 Q2 法說會逐字稿

Greetings and welcome to the Methode Electronics second-quarter FY2025 results call. (Operator Instructions) Please note this conference is being recorded.

您好，歡迎您參加 Methode Electronics 2025 財年第二季業績電話會議。（操作員說明）請注意本次會議正在錄製中。

I will now turn the conference over to your host, Mr. Robert Cherry, Vice President of Investor Relations. Sir, the floor is yours.

現在我將會議交給東道主投資者關係副總裁羅伯特·切裡先生。先生，地板是你的了。

Thank you, operator. Good morning and welcome to Methode Electronics FY2025 second-quarter earnings conference call. For this call, we have prepared a presentation entitled Fiscal 2025 second-quarter financial results which can be viewed on the webcast of this call or found at methode.com on the investors page.

謝謝你，接線生。早安，歡迎參加 Methode Electronics 2025 財年第二季財報電話會議。對於本次電話會議，我們準備了題為《2025 財年第二季度財務業績》的演示文稿，您可以在本次電話會議的網絡廣播中觀看該演示文稿，也可以在methode.com 的投資者頁面上找到該簡報。

This conference call contains certain forward-looking statements which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are subject to the Safe Harbor Protection provided under the Securities laws. Methode owner takes no duty to update any forward-looking statement to conform the statement to actual results or changes in Methode's expectations on a quarterly basis or otherwise.

本次電話會議包含某些前瞻性陳述，這些陳述反映了管理階層對未來事件和營運績效的預期，並且僅代表截至本次電話會議之日的情況。這些前瞻性陳述受證券法規定的安全港保護的約束。Methode 所有者沒有義務按季度或以其他方式更新任何前瞻性聲明，以使該聲明符合實際結果或 Methode 預期的變化。

The forward-looking statements in this conference call involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in Methode's filings with the Securities and Exchange Commission such as our 10-Q and 10-K reports.

本次電話會議中的前瞻性陳述涉及許多風險和不確定性。Methode 向美國證券交易委員會提交的文件（例如我們的 10-Q 和 10-K 報告）中詳細介紹了可能導致實際結果與我們的預期有重大差異的因素。

On slide 4, please see an agenda for our call today. We will begin with a business update, then a financial update followed by a Q&A session. At this time, I'd like to turn the call over to Mr. Jon DeGaynor, President and Chief Executive Officer.

在投影片 4 上，請查看我們今天電話會議的議程。我們將從業務更新開始，然後是財務更新，最後是問答環節。現在，我想將電話轉給總裁兼執行長 Jon DeGaynor 先生。

Thanks, Rob. And good morning, everyone. Thank you for joining us for our second-quarter earnings conference call. I'm joined today by Laura Kowalchik, our Chief Financial Officer.

謝謝，羅布。大家早安。感謝您參加我們的第二季財報電話會議。今天我們的財務長勞拉·科瓦爾奇克 (Laura Kowalchik) 也加入了我的行列。

We are pleased to have Laura join the Methode team, given her background and experience. She has an impressive track record of delivering successful business transformations within our industry and has gotten off to a fast start at Methode.

鑑於 Laura 的背景和經驗，我們很高興她加入 Methode 團隊。她在行業內成功實現業務轉型方面擁有令人印象深刻的記錄，並在 Methode 迅速起步。

Turning to slide 5 and our results for the quarter, our sales were $293 million, and our adjusted pre-tax income was $9 million. As noted in our earnings release, the quarter benefited from an extra week. Our FY2025 is a 53-week year, and that extra week fell into this quarter.

轉向幻燈片 5 和我們本季的業績，我們的銷售額為 2.93 億美元，調整後的稅前收入為 900 萬美元。正如我們在財報中指出的那樣，該季度受益於額外一周的時間。我們的 2025 財年是 53 週的一年，額外的一週屬於本季。

Aside from the impact of the extra week, sales benefited from higher demand from our power products and data centers and electric vehicles. We also had growth in Europe from automotive program launches, offsetting these drinks were program roll-offs that we discussed before and demand weakness in the commercial vehicle market impacting our lighting business. Overall, our sales in the quarter were on track with our expectations.

除了額外一周的影響外，銷售還受益於我們的電力產品、資料中心和電動車的更高需求。我們在歐洲也因汽車項目的推出而實現了成長，抵消了我們之前討論過的項目縮減以及商用車市場需求疲軟影響我們的照明業務的影響。整體而言，我們本季的銷售額符合我們的預期。

The solid sales volume along with progress on our cost reduction efforts drove the pre-tax income improvement in the quarter. In particular, we had a notable reduction in freight costs, particularly premium freight, which is a direct reflection of our overall improved operational execution. The better-than-expected result was also driven by improved fixed overhead absorption, another sign of execution improvement.

穩定的銷售以及我們降低成本努力的進展推動了本季稅前收入的改善。特別是，我們的貨運成本顯著降低，特別是優質貨運，這直接反映了我們整體營運執行力的提高。好於預期的結果也是由於固定管理費用吸收的改善而推動的，這是執行力改善的另一個跡象。

Turning to EV activity, sales in the quarter were 20% of our consolidated total. A sequential increase from 18% in the first quarter. We are experiencing the beginning of a wave of new program launches for EV power applications. As such, we continue to expect the EV percentage to grow further, and it should be over 20% for our full year fiscal 2025.

說到電動車活動，本季的銷售額占我們合併總額的 20%。較第一季的 18% 環比增長。我們正在經歷一波針​​對電動車電力應用的新計畫啟動浪潮。因此，我們繼續預期電動車百分比將進一步成長，2025 財年全年比例應超過 20%。

While our sales are currently on track for the full year, there are clearly some tailwinds and headwinds in several of our key end markets, helping us is the growth in data centers. Conversely, hurting us is the weakness in automotive and commercial vehicle demand. The EV market has clearly softened particularly in North America, but our program launches are mitigating that softening.

雖然我們的全年銷售目前已步入正軌，但我們的幾個關鍵終端市場顯然存在一些順風和逆風，資料中心的成長對我們有所幫助。相反，傷害我們的是汽車和商用車需求疲軟。電動車市場明顯疲軟，尤其是在北美，但我們推出的計畫正在緩解這種疲軟。

Turning to the balance sheet, we are maintaining an acute focus on managing it and generating cash, while we experienced a timing issue with accounts payable this quarter that led to a sizable reduction of net cash from operating activities. We were comfortably in full compliance with all our debt covenants.

談到資產負債表，我們一直高度關注管理資產負債表和產生現金，同時我們在本季度遇到了應付帳款的時間問題，導致經營活動淨現金大幅減少。我們完全遵守了所有債務契約。

On the order front, we had another solid quarter with over $50 million in the annual program awards. This is on track with our expectations for the year. The pipeline of bookings is subject to reduction and/or delay due to customer decisions and or market conditions.

在訂單方面，我們又度過了一個穩定的季度，年度計劃獎勵超過 5000 萬美元。這符合我們今年的預期。由於客戶決定和/或市場狀況，預訂管道可能會減少和/或延遲。

Lastly and as I have emphasized before, our immediate priority is to successfully execute on the large pipeline of new programs that must be launched in the next 18 months. In fiscal '25 we have over 30 program launches and in fiscal '26 we have another 20 plus programs to launch. Our customers are counting on us and we plan to deliver. In short, we believe that our efforts to improve our execution have started to bear fruit as clearly evidenced by the better-than-expected results in the quarter.

最後，正如我之前所強調的，我們的當務之急是成功執行必須在未來 18 個月內啟動的大量新專案。在 25 財年，我們推出了 30 多個計劃，在 26 財年，我們還有另外 20 多個計劃要啟動。我們的客戶信賴我們，我們計劃交付。簡而言之，我們相信，我們改善執行力的努力已開始取得成果，本季好於預期的業績就清楚地證明了這一點。

Turning to slide 6, the awards identified here are some of the key wins in the quarter and represent $43 million of annual sales at full production. As usual, the launch timing of these programs could be anywhere in the range of one to two years from now. All of these awards were for power distribution products, for applications in EV, traditional auto and defense. As you can see from this chart, bookings can be lumpy. What's important to note is that on a trailing 12-month basis, we are winning awards at a rate sufficient to at least maintain our current annual sales level. Overall, we feel our award activity has been solid.

轉向幻燈片 6，這裡確定的獎項是本季的一些關鍵勝利，代表滿載生產時的年銷售額為 4,300 萬美元。像往常一樣，這些計劃的啟動時間可能是從現在起一到兩年內的任何時間。所有這些獎項均頒發給配電產品、電動車、傳統汽車和國防應用。從這張圖表可以看出，預訂量可能會很不穩定。值得注意的是，在過去 12 個月的基礎上，我們贏得獎項的速度足以至少維持我們目前的年度銷售水準。總體而言，我們認為我們的獎勵活動非常紮實。

Turn to slide 7. One of my learnings since taking the CEO role in July is that the company's path to success relies on returning to a one method mindset where all our global teams are working together and moving in the same direction. This mindset existed within Methode historically and needed to be reinvigorated.

轉到投影片 7。自從七月份擔任執行長以來，我學到的一個教訓是，公司的成功之路依賴於回歸單一方法的思維方式，即我們所有的全球團隊共同努力並朝著同一方向前進。這種心態在 Methode 歷史上就存在，需要重新註入活力。

To facilitate this reinvigoration. We have made a couple of key executive moves. We've appointed a dedicated leader that will oversee all global strategic launch and commercial activities for the company's automotive business. On December 2, Lars Ullrich joined Methode as Senior Vice President, Global Automotive Business reporting directly to me.

為了促進這種復興。我們已經採取了一些關鍵的行政措施。我們任命了一位專門的領導者，負責監督公司汽車業務的所有全球策略發布和商業活動。12 月 2 日，Lars Ullrich 加入 Methode，擔任全球汽車業務資深副總裁，直接向我報告。

Lars comes to us with over 20 years of business and strategic leadership experience in multinational companies mainly as suppliers like Infineon and Robert Bosch. During his career, he has built a reputation for strategic and innovative thinking, a collaborative approach to customer relationships, operational excellence and clarity in the face of challenges. He will be a strong addition to our leadership team and help us to develop and launch programs that delight our customers.

Lars 來到我們這裡時擁有 20 多年在跨國公司（主要是英飛凌和羅伯特博世等供應商）的業務和策略領導經驗。在他的職業生涯中，他在策略和創新思維、客戶關係協作方法、卓越營運和應對挑戰時的清晰性方面享有盛譽。他將成為我們領導團隊的強大補充，幫助我們開發和啟動讓客戶滿意的專案。

In addition, we have also promoted Sadek EL Idrissi to lead all operations and engineering in Europe and the Middle East. This will be in addition to his current responsibilities as our Vice President of China. In his 18-year career at Methode, he has held management roles of increasing responsibility, culminating with the successful execution of the company's strategy in China. Sadek is well respected in his experience, leadership and demonstrated ability to achieve results, makes him an ideal leader to guide our European and Middle Eastern operations through a challenging period of growth.

此外，我們也提拔 Sadek EL Idrissi 領導歐洲和中東的所有營運和工程。這將是他目前擔任中國區副總裁職責的補充。在 Methode 18 年的職業生涯中，他擔任過越來越重要的管理職務，最終成功執行了公司在中國的策略。薩德克的經驗、領導力和成果的能力備受尊敬，這使他成為指導我們歐洲和中東業務度過充滿挑戰的成長時期的理想領導者。

These are both initial but crucial steps to getting back to our history operating as one method to drive success. And with these steps, we now have fresh perspectives in the roles of CEO, CFO, CPO and SVP of Global Auto as compared to just five short months ago.

這些都是恢復我們作為推動成功的一種方法的歷史的最初但關鍵的步驟。透過這些步驟，與短短五個月前相比，我們現在對 Global Auto 的執行長、財務長、首席產品長和高級副總裁的角色有了新的看法。

Turn to slide 8. In summary for the quarter, sales were on track while our pre-tax income was better than expected. EV activity steadily grew and was 20% of total sales. Data centers were a market tailwind, but the auto and commercial vehicle markets were a concern. While we experienced a timing issue on cash, we were comfortably in full compliance with all debt covenants. Lastly, program awards were solid.

轉到投影片 8。總結本季度，銷售步入正軌，稅前收入優於預期。電動車銷量穩定成長，佔總銷量的 20%。資料中心是市場的推動力，但汽車和商用車市場是一個令人擔憂的問題。雖然我們遇到了現金方面的時間問題，但我們完全遵守了所有債務契約。最後，節目獎項也很紮實。

Going forward, our focus this fiscal year is to transform the business while positioning it to return to profitable growth next fiscal year. Meanwhile, we are focusing intensely on executing our 30 programs while taking decisive actions to address execution and costs.

展望未來，我們本財年的重點是業務轉型，同時定位其在下財年恢復獲利成長。同時，我們正集中精力執行 30 個項目，同時採取果斷行動來解決執行和成本問題。

Led by our new leadership team that we have systematically built over the last several months. Methode is focused on transforming its business. We are also committed to compliance and taking steps to invest in our compliance resources and processes.

由我們過去幾個月系統建立的新領導團隊領導。Methode 專注於業務轉型。我們也致力於合規性，並採取措施投資於我們的合規資源和流程。

Regarding compliance Methode has disclosed that the company has received a subpoena from the SEC, seeking documents and information. We take all compliance matters seriously and are cooperating fully. While we are limited in what we can say about this matter, we are committed to transparency won't keep you informed.

關於合規性 Methode 透露，該公司已收到 SEC 的傳票，要求提供文件和資訊。我們認真對待所有合規事宜並全力配合。雖然我們對此事能說的有限，但我們致力於透明度，但不會讓您了解情況。

Lastly, for FY2025, we are reaffirming guidance for flat sales and raising adjusted pre-tax income guidance to approximately breakeven. I spent a tremendous amount of time traveling over the past quarter, meeting with customers, visiting our plants and talking to employees. I can share with great confidence that our team is clearly energized and the results from this quarter demonstrate that our business is heading in the right direction.

最後，對於 2025 財年，我們重申持平銷售指引，並將調整後的稅前收入指引提高至接近損益兩平。過去一個季度，我花了大量時間出差、會見客戶、參觀我們的工廠並與員工交談。我可以充滿信心地告訴大家，我們的團隊顯然充滿活力，本季的業績顯示我們的業務正朝著正確的方向發展。

At this point, I'll turn the call over to Laura who will provide more detail on our second quarter financials.

此時，我會將電話轉給勞拉，她將提供有關我們第二季財務狀況的更多詳細資訊。

Thank you, Jon. And good morning, everyone. I am very excited to join the Methode team, and thanks to John for his kind remarks.

謝謝你，喬恩。大家早安。我很高興加入 Methode 團隊，並感謝 John 的善意評論。

Please turn to slide 10. The second quarter net sales were $292.6 million compared to $288 million in fiscal '24, an increase of 2%. On a sequential basis, sales increased 13% from the fiscal '25 first quarter.

請翻到投影片 10。第二季淨銷售額為 2.926 億美元，較 2024 財年的 2.88 億美元成長 2%。與 2025 財年第一季相比，銷售額較上季成長了 13%。

As Jon referenced, the company's typical fiscal year is 52 weeks, but occasionally requires an additional week in order for the fiscal year to end on the Saturday, closest to April 30. The current fiscal year ending May 3, 2025, is a 53-week fiscal year with the additional week being included in this fiscal quarter, making it a 14-week period. The prior year second quarter, as well as this year's first quarter were 13-week periods. As a result, the extra week contributed to our financial comparisons.

正如 Jon 所提到的，該公司的典型會計年度為 52 週，但有時需要額外一周才能使會計年度在最接近 4 月 30 日的星期六結束。截至 2025 年 5 月 3 日的當前財政年度是一個為期 53 週的財政年度，本財政年度還包括額外的一周，使其為期 14 週。去年第二季以及今年第一季都是13週的周期。因此，額外的一周有助於我們進行財務比較。

In this quarter, sales of power products into data center applications grew both year-over-year and sequentially, we also saw some modest growth in EV sales sequentially. The quarter also benefited from our launch activity in Europe. Offsetting those strengths with the impact of the previously disclosed roll off of an EV lighting program in Asia. That program ended toward the end of the last fiscal year and has had no sales this year. Also creating a headwind was the market weakness for our lighting products and commercial vehicle and off-road applications.

本季度，資料中心應用的電源產品銷量較去年同期均有所成長，我們也看到電動車銷量較上季略有成長。本季也受惠於我們在歐洲的推出活動。先前披露的亞洲電動車照明計劃的推出所帶來的影響抵消了這些優勢。該計劃於上一財年末結束，今年沒有銷售。我們的照明產品、商用車和越野應用的市場疲軟也造成了不利影響。

First quarter adjusted income from operations was $14.3 million, up $8.3 million from fiscal '24. On a sequential basis, adjusted income from operations improved $19 million from the fiscal '25 first quarter. Please see the appendix for reconciliation of all adjusted measures to GAAP. The increase in adjusted operating income both year-over-year and sequentially was driven by the higher sales volume.

第一季調整後的營運收入為 1,430 萬美元，比 2024 財年增加 830 萬美元。與 2025 財年第一季相比，調整後的營運收入較上季增加了 1,900 萬美元。請參閱附錄，了解所有調整後的衡量標準與 GAAP 的調整。調整後營業收入的年比和環比成長是由銷售增加所推動的。

In addition, we were able to significantly reduce our freight cost, particularly our premium freight due to the operational improvements that John described. The increased volume also served to improve our fixed overhead absorption. Overall, our second-quarter sales were on track with our full year expectations.

此外，由於約翰所描述的營運改進，我們能夠大幅降低貨運成本，特別是優質貨運。增加的體積也有助於改善我們的固定開銷吸收。整體而言，我們第二季的銷售符合全年預期。

Please turn to slide 11. Shifting to EBITDA, a non-GAAP financial measure second-quarter adjusted EBITDA was $26.7 million, up $5.5 million from the same period last year. On a sequential basis, adjusted EBITDA improved $16.9 million from the fiscal '25 first quarter. The adjusted EBITDA benefited both year-over-year and sequentially from higher sales and gross profit. It was also driven by lower selling and administrative expenses in both comparisons.

請翻到投影片 11。轉向 EBITDA，一項非 GAAP 財務指標，第二季調整後 EBITDA 為 2,670 萬美元，比去年同期增加 550 萬美元。與 2025 財年第一季相比，調整後 EBITDA 環比增加了 1,690 萬美元。調整後的 EBITDA 年比和季比均受益於更高的銷售額和毛利。這也是由於兩次比較中銷售和管理費用較低所致。

Please turn to slide 12. Second-quarter adjusted pre-tax income was $6.2 million, up $3.8 million from fiscal '24. On a sequential basis, adjusted pre-tax income improved $15.3 million from the fiscal '25 first quarter. Compared to the prior year in the last quarter, adjusted pre-tax income was driven by higher net sales. In addition, both comparisons benefited from lower freight while being partially offset by higher net interest expense.

請翻到投影片 12。第二季調整後稅前收入為 620 萬美元，比 24 財年增加 380 萬美元。與 2025 財年第一季相比，調整後的稅前收入較上季增加了 1,530 萬美元。與去年同期相比，調整後的稅前收入是由淨銷售額增加所推動的。此外，這兩項比較都受益於較低的運費，但被較高的淨利息支出部分抵銷。

Second quarter adjusted diluted earnings per share increased to $0.14 from $0.06 in the same period last fiscal year. On a sequential basis, the adjusted earnings per share increased $0.45 from the fiscal '25 first quarter. The second quarter adjusted EPS included a tax expense due to the guilty tax treatment on foreign earnings which was offset by various tax benefits. The result was approximately zero adjusted tax expense in the quarter. Overall, our second quarter adjusted pre-tax income was slightly ahead of our full year expectations.

第二季調整後攤薄每股收益從上一財年同期的 0.06 美元增至 0.14 美元。與 2025 財年第一季相比，調整後每股收益季增 0.45 美元。第二季調整後每股盈餘包括因海外收入的有罪稅務處理而產生的稅收費用，該費用被各種稅收優惠所抵消。結果是本季調整後的稅收費用大約為零。總體而言，我們第二季調整後的稅前收入略高於我們的全年預期。

Turn to slide 13. debt was up $9.7 million from the prior year end. We ended the quarter with $97 million in cash, down $64.5 million Elevator program launch activity drove higher inventory investment year-to-date, this was the primary use of cash year-to-date. Net debt, a non-GAAP financial measure increased by $74.2 million to $243.6 million. The increase was mainly due to the aforementioned use of cash. Despite the consumption of cash, we were in compliance with all of our debt covenants at the end of the second quarter.

翻到投影片 13。本季結束時，我們的現金為 9,700 萬美元，減少了 6,450 萬美元。淨債務（一項非 GAAP 財務指標）增加了 7,420 萬美元，達到 2.436 億美元。此增加主要是由於上述現金使用所致。儘管消耗了現金，但我們在第二季末遵守了所有債務契約。

Please turn to slide 14. The second quarter's net cash from operating activities was a negative $48 million as compared to a negative $0.6 million in fiscal '24. The decrease of $47.4 million was primarily due to a sizable decrease in accounts payable related to the timing of payments between the first and second quarter as well as the 14-week period.

請翻到投影片 14。第二季經營活動產生的淨現金為負 4,800 萬美元，而 2024 財年為負 60 萬美元。減少 4,740 萬美元主要是由於與第一季和第二季以及 14 週期間付款時間相關的應付帳款大幅減少。

Second-quarter capital expenditure was $10.4 million as compared to $10.7 million in fiscal '24, a slight decrease of $0.3 million. Second quarter free cash flow, a non-GAAP financial measure was negative $58.4 million as compared to a negative $11.3 million in fiscal '24, a decrease of $47.1 million. This decrease was mainly due to the accounts payable timing issue that I just described.

第二季資本支出為 1,040 萬美元，與 2024 財年的 1,070 萬美元相比，略有減少 30 萬美元。第二季自由現金流（非公認會計準則財務指標）為負 5,840 萬美元，而 24 財年為負 1,130 萬美元，減少了 4,710 萬美元。這項減少主要是由於我剛才描述的應付帳款時間問題。

Please turn to 15. Regarding forward-looking guidance is based on management's best estimate and is subject to change due to a variety of factors as noted at the bottom of the slide. For fiscal '25, we are reaffirming expected net sales to be similar to fiscal '24 with the third quarter expected to be similar to third quarter of fiscal '24. We are raising adjusted pre-tax income guidance to be approximately breakeven. This raise is mainly a function of our outperformance in the second quarter.

請轉到15。有關前瞻性指引基於管理層的最佳估計，並可能因幻燈片底部所述的各種因素而發生變化。對於 25 財年，我們重申預計淨銷售額將與 24 財年相似，第三季預計將與 24 財年第三季相似。我們正在提高調整後的稅前收入指導，使其接近收支平衡。此次加薪主要是由於我們第二季的優異表現。

Please note that the adjusted pre-tax income in the fourth quarter is expected to be significantly stronger than the third quarter, with the third quarter potentially having a pre-tax loss. Please keep in mind that our third quarter is historically our weakest quarter due to the holidays and customer shutdowns. In addition, it will be our first full quarter since the effective end of the GMT 1 program, and we are also seeing some near-term auto market weakness just like others in the industry.

請注意，第四季度調整後的稅前收入預計將明顯強於第三季度，第三季可能會出現稅前虧損。請記住，由於假期和客戶關閉，我們的第三季是歷史上最疲軟的季度。此外，這將是自 GMT 1 計劃有效結束以來我們的第一個完整季度，而且我們也看到了一些近期汽車市場的疲軟，就像業內其他人一樣。

This fiscal year '25 guidance assumes depreciation and amortization of $60 million to $65 million, CapEx of $45million to $55 million and tax expense of $13 million to $15 million. The reduction in CapEx guidance is primarily related to the lower run rate year-to-date. The increase in tax guidance is related to a higher valuation allowance for US deferred tax assets which was $7.5 million through the first half of the year.

本財年 '25 指引假設折舊和攤提為 6,000 萬至 6,500 萬美元，資本支出為 4,500 萬至 5,500 萬美元，稅費為 1,300 萬至 1,500 萬美元。資本支出指導的減少主要與年初至今較低的運作率有關。稅務指引的增加與美國遞延稅資產的估價備抵較高有關，截至今年上半年為 750 萬美元。

Looking further ahead to fiscal 2026, we are reaffirming expected net sales to be greater than fiscal '25 and pre-tax income to be positive and notably greater than fiscal '25. That concludes my comments, and we can open it up to questions.

展望 2026 財年，我們重申預期淨銷售額將高於 25 財年，稅前收入將為正值，尤其高於 25 財年。我的評論到此結束，我們可以提出問題。

Thank you. At this time, we will be conducting our question-and-answer session. (Operator Instructions)

謝謝。此時，我們將進行問答環節。（操作員說明）

John Franzreb, Sidoti & Company.

約翰‧弗蘭茲雷布 (John Franzreb)，西多蒂公司 (Sidoti & Company)。

Good morning, everyone, and thanks for taking the questions.

大家早安，感謝您提出問題。

I was wondering if you could quantify the impact of the extra week, not only on the top line but perhaps on operating results.

我想知道您是否可以量化額外一週的影響，不僅是對營收的影響，而且可能對營運表現的影響。

So, John, from a what we look at with the extra week is it's approximately $20 million worth of revenue and then it would have the follow-on operating results that go along with that.

所以，約翰，從我們的觀察來看，額外一週的收入約為 2000 萬美元，然後會有隨之而來的後續營運表現。

Okay, those drops down. Got it. And what cost control method measures impacted the second-quarter results beyond the deduction and freight costs? Was there anything else that had a positive impact on operating income?

好吧，那些下降了。知道了。除了扣除費用和運費之外，還有哪些成本控制方法措施影響了第二季的業績？還有其他因素對營業收入有正面影響嗎？

Yeah, and as we said, we're seeing thinning of overheads. We're also seeing improvement in our scrap activities. So it is execution driven activities that really are driving the performance -- execution focused activities that are driving the performance.

是的，正如我們所說，我們看到管理費用正在減少。我們也看到報廢活動有所改善。因此，真正推動績效的是執行驅動的活動—以執行為中心的活動推動績效。

Okay, fair enough. And of the $50 million in new orders, how much was that directly related to new programs in the EV market versus other markets?

好吧，很公平。與其他市場相比，在 5000 萬美元的新訂單中，有多少與電動車市場的新項目直接相關？

Well, the majority of our launches are all in on EV programs or on power programs as we've talked about. So the -- all of the awards are in those areas we said.

嗯，正如我們所討論的，我們的大部分發布都是針對電動車項目或電力項目。因此，所有獎項都屬於我們所說的這些領域。

Fair enough. And one last question, I'll get back into queue. In regards to the improvement in the data center market, can you quantify what kind of impact that is up year-over-year or any other way that puts it all in context?

很公平。最後一個問題，我將回到隊列中。關於資料中心市場的改善，您能否量化逐年上升的影響，或以其他方式將其放在背景中？

So, data centers are roughly 3% to 5% of our total sales. And what we're seeing is that we're about 50% year over year improvement. It's above average margin for us and we're really excited about the opportunities that we see in that space going forward and trying to expand that business beyond the 3% to 5%.

因此，資料中心大約占我們總銷售額的 3% 到 5%。我們看到的是，我們的同比改進約為 50%。這對我們來說高於平均水平，我們對在該領域看到的未來​​機會感到非常興奮，並試圖將業務擴展到 3% 至 5% 以上。

Okay. Fair enough. I'll get back to you. Thanks for taking the questions.

好的。很公平。我會回覆你。感謝您提出問題。

Thanks for the questions, John.

謝謝你的提問，約翰。

Luke Junk, Baird.

路克垃圾，貝爾德。

Great. Thank you for taking the questions and good morning. Wanted to circle back just to the pre-tax and can walk into the third quarter. Appreciate all of the things that you mentioned. I'm just wondering if there's anything else that we should be accounting for in terms of things that may have been temporary in the current quarter beyond the inventory reserve? Any impacts that we should think about from that extra week that have an outside bottom line impact either, Jon?

偉大的。感謝您提出問題，早安。想回到稅前，可以走進第三季。感謝您提到的所有事情。我只是想知道除了庫存儲備之外，我們是否還應該考慮本季可能暫時存在的其他事項？喬恩，我們應該考慮額外一周的任何影響，這些影響也會對外部底線產生影響嗎？

Hey, Luke, it's Jon. Good morning. I'll take the first piece and if Laura wants to add color to it, you can. There were not, other than the extra week, there were not one-off positive performance things in Q2. So as we think about Q3 and as we talk about the perspectives with regard to Q3, it really comes down to -- it's our lightest revenue quarter.

嘿，盧克，我是喬恩。早安.我會拿第一件，如果勞拉想給它添加顏色，你可以。除了額外一週之外，第二季沒有出現一次性的正面表現。因此，當我們思考第三季並談論對第三季的看法時，實際上可以歸結為——這是我們收入最輕的季度。

So we feel confident about the base performance of the business where we are and the progress that we're making. But we need to be transparent with our investors that Q3 is a challenging quarter just because of the holiday periods around the world, not because of something else, one-off or something else special within Methode.

因此，我們對我們所在業務的基本業績以及我們正在取得的進展充滿信心。但我們需要向投資者坦白，第三季度是一個充滿挑戰的季度，只是因為世界各地的假期，而不是因為 Methode 內部的其他情況、一次性情況或其他特殊情況。

Okay. Then switching gears here. Wondering if you'd be able to comment just where we stand from a launch standpoint right now. In other words, you're anticipating 30 plus launches this year, just how many of those are already in motion versus what remains to execute. And maybe if you could just remind us of the waiting to Europe and risk of any launches flipping to the right geographically specifically.

好的。然後在這裡換檔。想知道您是否能夠從發布的角度對我們目前的立場發表評論。換句話說，您預計今年將有 30 多個專案發布，其中有多少已經啟動，哪些尚未執行。也許您能提醒我們等待歐洲以及任何發布的風險在具體地理位置上向右偏轉。

So, I mean, from a launch standpoint, many of them are capitals on the floor. We're in final development phase or when wrap up phase. These launches are mainly between North America and EMEA and they're, split relatively equally. The -- what we do see is we do see certain customers, particularly on EV programs, where they may delay the start of their programs. It's not program cancellations, but it is exactly when they start those ramp up. So we're working with our customers from the standpoint of making sure that we've got transparency on when exactly they start and how do we manage our pipeline of inventory and some of what we talked about here with regard to the uses of cash, but also what do we do to support our customers there?

所以，我的意思是，從啟動的角度來看，其中許多都是市場上的資本。我們正處於最終開發階段或總結階段。這些發布主要在北美和歐洲、中東和非洲之間進行，而且分佈相對平均。我們確實看到的是，我們確實看到某些客戶，特別是在電動車專案上，他們可能會推遲專案的啟動。這不是計劃取消，而是他們開始增加計劃的時間。因此，我們正在與客戶合作，確保他們的確切開始時間、我們如何管理我們的庫存管道以及我們在這裡討論的有關現金使用的一些內容具有透明度，以及我們如何支持那裡的客戶？

I don't know if you're able to make any specific comments relative to [Stellantiss], but obviously a really important launch customer this year. Any color there would be great as well if possible.

我不知道您是否能夠對 [Stellantiss] 做出任何具體評論，但顯然它是今年非常重要的啟動客戶。如果可能的話，任何顏色都很棒。

So, yeah, [Stellantis] is, as we've talked about, is a very important customer for us. And as we get the programs ramped up, they'll be one of our largest customers, over $200 million revenue customer for us. The -- we do see some, if you will, some timing shifts and that's been publicized by them that they're taking their time with regard to their EV launches so it's not new news. But what we see is we're not -- one EV programs are at 20% of total method. So we're not overly exposed to EV programs and we're not overly exposed to [Stellantis], we're pretty comfortable with our balance on the different OEs. So [Stellantis] is an important customer to us, we stay in very close contact with them and we feel good about where that business is going, but we do watch it closely.

所以，是的，正如我們所說，[Stellantis] 對我們來說是一個非常重要的客戶。隨著我們的計劃不斷推進，他們將成為我們最大的客戶之一，為我們帶來超過 2 億美元的收入客戶。如果你願意的話，我們確實看到了一些時間上的變化，他們已經公開表示，他們正在慢慢推出電動車，所以這不是新消息。但我們看到的是，事實並非如此——一項電動車計畫僅佔總計畫的 20%。因此，我們並沒有過度接觸 EV 項目，也沒有過度接觸 [Stellantis]，我們對不同 OE 上的平衡感到非常滿意。因此，[Stellantis] 對我們來說是一個重要的客戶，我們與他們保持著非常密切的聯繫，我們對該業務的發展方向感到滿意，但我們確實密切關注。

Got it. And then lastly just on data center, a couple maybe clarifying items. One, can you just help us understand, within a 3% to 5% overall exposure, industrial segment versus interface. And then in terms of the really strong year-over-year growth, are you seeing any AI related impacts in that business, or would you say this is more core data center that's driving the improvement? Thank you.

知道了。最後，關於資料中心，有一些可能需要澄清的事項。第一，您能否幫助我們了解，在 3% 到 5% 的整體曝光度內，工業細分市場與介面市場。然後，就真正強勁的同比增長而言，您是否看到該業務中有任何與人工智慧相關的影響，或者您認為這是推動改進的更核心的資料中心？謝謝。

So as we said, it is a relatively small portion of the total. It is fairly significant year-over-year growth, and we do see both AI and and just overall data center growth. And what we're exploring right now, we're spending quite a bit of quite a bit of time on what are additional opportunities where we can use our capabilities more fully to actually expand this space.

正如我們所說，它只佔總數的一小部分。這是相當顯著的同比增長，我們確實看到了人工智慧和整體資料中心的成長。我們現在正在探索的是，我們花了相當多的時間來研究哪些額外的機會，我們可以更充分地利用我們的能力來實際擴展這個空間。

Got it. I will go ahead and leave it there. Thank you.

知道了。我會繼續把它留在那裡。謝謝。

Gary Prestopino, Barrington Research.

加里‧普雷斯托皮諾，巴靈頓研究中心。

Thank you. Good morning, all. And welcome, Laura.

謝謝。大家早安。歡迎，勞拉。

A couple of questions initially, a little nitpicky. Interest expense looked like it was up sequentially almost a $1.4 million, was there any one-time expenses in that interest expense number or is that going to be the run rate at $6.2 million per quarter for the remainder of the year.

最初有幾個問題，有點挑剔。利息支出看起來比上一季增加了近 140 萬美元，該利息支出數字中是否存在一次性支出，或今年剩餘時間內每季 620 萬美元的運行率。

Yeah, that should be the run rate. But as that does decrease, obviously, it will go down some.

是的，這應該是運行率。但隨著這一數字確實減少，顯然，它會下降一些。

Okay. And then could you if, it was a -- you mentioned something about an inventory reserve reversal and interface, could you quantify that for us?

好的。然後，如果您提到了有關庫存儲備逆轉和介面的內容，您能為我們量化一下嗎？

Yeah, the inventory reserve reduction in the interface segment was approximately a half a million.

是的，介面部分的庫存儲備減少了大約50萬。

Okay. So $500,000, great. Thank you.

好的。50萬美元，太棒了。謝謝。

So you mentioned one of the positive aspects of the quarter was premium freight costs are down substantially, which is great news. Have you reached a point here where you feel that your premium freight costs are now more normalized? Or is there still room to improve that that metric and if you could, could you maybe share how much premium freight was down?

因此，您提到本季的積極方面之一是保費運費大幅下降，這是個好消息。您是否已經到了認為您的優質運費現在更加正常化的程度？或者該指標還有改進的空間嗎？

So the answer, Gary is no, we're not at a normalized period, both from a premium freight and from a scrap perspective. We're continuing to drive additional improvement there. In the quarter, we had $7 million worth of premium freight and we're working to move that down sequentially. And as we've said in the past, the team, particularly in Mexico, I'm sorry, I misspoke, it's a $7 million reduction quarter-over-quarter. I apologize.

所以答案是，加里是否定的，無論是從溢價運費還是從廢品角度來看，我們都沒有處於正常化時期。我們正在繼續推動那裡的進一步改進。本季度，我們擁有價值 700 萬美元的優質貨運，我們正在努力逐步降低這一比例。正如我們過去所說，團隊，特別是墨西哥團隊，對不起，我說錯了，季度環比減少了 700 萬美元。我道歉。

But the teams both around the world, but particularly the team in Mexico has done a very good job of getting their business stabilized from where we were in fiscal 2024. And from a scrap and premium freight perspective, I would expect to see continued improvement both in EMEA and in North America with regard to how we execute. Their -- we've got some additional work going on with regard to some pretty in depth workshops to try to drive improvement in both Egypt and in Mexico, that'll drive scrap down and will continue to drive premium freight down.

但世界各地的團隊，尤其是墨西哥的團隊，在使業務穩定在 2024 財年的基礎上做得非常好。從廢鋼和優質貨運的角度來看，我預計歐洲、中東和非洲和北美地區的執行方式將持續改善。我們正在進行一些額外的工作，舉辦一些相當深入的研討會，試圖推動埃及和墨西哥的改進，這將降低廢品率，並繼續降低優質運費。

Okay. That's all good news. I just want to talk about some of these program launches, but particularly with [Stellantis]. But first of all, beyond [Stellantis], could you maybe talk about where some of this new business is coming from? What OEMs?

好的。這都是好消息。我只想談談其中一些計劃的啟動，但特別是[斯特蘭蒂斯]。但首先，除了 [Stellantis] 之外，您能否談談一些新業務的來源？什麼 OEM 廠商？

So we -- Gary, as you know, Intel program is in production, we're not allowed to name customer names. But it's balanced, it's balanced between, if you will, European OEMs, North American OEMs, as well as Japanese OEMs. That's as much detail as I'm able to give you at this point from stuff that hasn't started production yet. The -- and it's both launches are primarily split between the European market and the North American market. Again, with the different name places that I mentioned to you or the different region regional companies that I mentioned to you. But the teams around the world are working to try to make sure that those launches go well.

所以我們——加里，如你所知，英特爾計劃正在生產中，我們不允許透露客戶姓名。但它是平衡的，如果你願意的話，它是在歐洲原始設備製造商、北美原始設備製造商以及日本原始設備製造商之間平衡的。這是我目前所能向您提供的尚未開始生產的詳細資訊。這兩款產品的發表主要分佈在歐洲市場和北美市場。再次，我向您提到的不同名稱地點或我向您提到的不同地區的區域公司。但世界各地的團隊正在努力確保這些發布順利進行。

Okay, so let me ask a question. Let me put a question for you this way, Jon. I follow other companies that are dealing with the EV market. They put together their projections on what, at least some of the companies, on what they can do to that particular OEM, based on what the OEM is telling them they think their production levels are going to be.

好吧，讓我問一個問題。讓我這樣問你一個問題，喬恩。我關注其他涉足電動車市場的公司。他們根據原始設備製造商告訴他們的生產水平，將他們的預測（至少是一些公司）放在一起，預測他們可以為特定的原始設備製造商做些什麼。

And then we're starting to see a slippage in the EV market, and obviously, those projections come down as we go through the year. So could you maybe are you -- could you maybe go through the sequence of how you're determining what your potential sales are going to be. I mean, you're taking the raw numbers from the OEM on what they think their production levels are or just give us some insight into that. Because it just appears to me that there's so many EVs coming out in the market, but they're not really getting purchased as quickly as they had been in the past.

然後我們開始看到電動車市場下滑，顯然，這些預測隨著時間的推移而下降。那麼，您能否詳細說明您如何確定潛在銷售額的順序。我的意思是，您從 OEM 那裡獲取了他們認為自己的生產水平的原始數據，或者只是讓我們對此有一些了解。因為在我看來，市場上出現瞭如此多的電動車，但它們並沒有像過去那樣迅速被購買。

Yeah. So as we've said in the past, so let me talk about how we think about this first.

是的。正如我們過去所說，讓我先談談我們對此的看法。

It's easy to get focused because the press is so focused on just North American EV penetration while recognizing that we are selling into customers in the US, in Europe and in China. So when you think about electric vehicle market penetration in the US, it's about 9%; in Europe, it's 21% 22%; and in China, it's 27%. So that -- those take rates are and the market penetration changes depending on the region. So as we talked about launches both in Europe and in North America, we're not as -- we're not solely exposed to the North American market. That's part number one.

媒體很容易集中註意力，因為媒體非常關注北美電動車的普及率，同時也意識到我們正在向美國、歐洲和中國的客戶銷售產品。因此，當你考慮美國電動車市場的滲透率時，它約為 9%；在歐洲，這一比例為 21% 22%；而在中國，這一比例為27%。因此，這些轉換率和市場滲透率會根據地區而變化。因此，當我們談論在歐洲和北美推出產品時，我們並不只面向北美市場。這是第一部分。

Secondly, we don't just take the customer volumes as they give as they give them to us. Certainly, we use that as a consideration, but we look at the sources of expert data if you will, whether it's global insights or IHS or others to try to sense check.

其次，我們不僅僅接受他們提供給我們的客戶量。當然，我們將此作為考慮因素，但如果您願意的話，我們會查看專家數據的來源，無論是全球見解還是 IHS 或其他試圖進行感知檢查的數據。

What is the -- are we telling us what do we read in the press, as well as what are the global experts are saying? And we sensitize then the ramp up, the timing, the overall volumes and therefore, what do we -- what do conversations do we need to have with customers? And what do we have to do with regard to our inventory plans, as well as to our CapEx plans? So that's how -- the approach that we're taking, Gary, is we validate, or we sensitize the customer data with third party data as well as our own subject matter expertise. And try to then work with customers to make sure that we're covering our inventories and that we're scaling the capital appropriately.

我們是否告訴我們在媒體上讀到了什麼，以及全球專家在說什麼？然後我們敏感地了解成長、時機、總量，因此，我們需要與客戶進行哪些對話？我們的庫存計劃和資本支出計劃該怎麼辦？這就是加里，我們正在採取的方法是我們驗證，或者我們利用第三方資料以及我們自己的主題專業知識來敏感化客戶資料。然後嘗試與客戶合作，確保我們覆蓋庫存並適當擴大資本規模。

Okay. That's very helpful. Thank you.

好的。這非常有幫助。謝謝。

John Franzreb, Sidoti & Company.

約翰‧弗蘭茲雷布 (John Franzreb)，西多蒂公司 (Sidoti & Company)。

Yeah. I'm just curious, is there any changes in your commercial vehicle assumptions in the coming year versus three months ago?

是的。我只是好奇，與三個月前相比，您對未來一年的商用車假設有什麼變化嗎？

You know, John, thanks for the question. Like we just said with regard to the EV is we rely on external forecasters like ACT for commercial vehicle and 2024 is a decline year-over-year and 2025 is still down. And what we're seeing is we're seeing some positivity toward -- if you will toward the end of calendar year 2025, which would be the middle of our middle of our fiscal year. What we have done soo it hasn't changed materially over the last quarter.

你知道，約翰，謝謝你的提問。正如我們剛才所說，關於電動車，我們依賴 ACT 等商用車外部預測機構，2024 年將年減，2025 年仍將下降。我們看到的是，如果你願意的話，我們會在 2025 日曆年年底看到一些積極的跡象，這將是我們財政年度中期的中期。我們所做的事情在上個季度沒有重大變化。

But what we are doing is we're spending a lot of time trying to reinvigorate deep in our relationships with the customers and I'm headed out to the West coast to visit a couple of customers before the holidays here. And we're really seeking to make sure that all of the relationships that we have on the commercial vehicle side are as robust as possible. We had customers visiting us in Europe, to our facilities in Europe a couple weeks ago, I had the chance to be there at the same time and we'll be seeing customers in a couple weeks on the CV side. So, the CV business is cyclical, and it's got a little different cycle than the past car space. Their cycles are more dramatic peak to trough than what we see in the past car space. But they're a very important customer base for us and we look forward to growing with our CV customers over time.

但我們正在做的是，我們花了很多時間試圖重振我們與客戶的深厚關係，我將在假期前前往西海岸拜訪一些客戶。我們確實希望確保我們在商用車方面的所有關係都盡可能牢固。幾週前，我們有客戶在歐洲參觀了我們在歐洲的工廠，我有機會同時去那裡，幾週後我們將在 CV 方面見到客戶。所以，商用車業務是週期性的，而且它的週期與過去的汽車領域略有不同。他們的周期從高峰到低谷比我們在過去的汽車空間中看到的更加引人注目。但他們對我們來說是非常重要的客戶群，我們期待與我們的履歷客戶一起成長。

Okay. And you touched on Mexico a few seconds ago. Where are we in that process of fixing the operations in Monterrey? Is that behind us? So how much more is there to go? Can you talk through what's going on there?

好的。幾秒鐘前你談到了墨西哥。我們在修復蒙特雷業務的過程中處於什麼階段？那是在我們後面嗎？那麼還有多少路要走呢？你能談談那裡發生了什麼事嗎？

So, I guess what I would say to you is there's a difference between fix and improve.

所以，我想我要對你說的是修復和改進之間是有區別的。

Fix would imply that it a relatively uncontrolled set of activities, where improve is more of a controlled set of activities. The team in Mexico, it's the one place I've been to twice in my tenure. And the majority, I said to you that we had premium freight reduction on a quarter-over-quarter basis of $7 million. The majority of that premium freight reduction was in Mexico.

修復意味著它是一組相對不受控制的活動，而改進更多的是一組受控活動。墨西哥隊，這是我在任期內去過兩次的地方。大多數人，我對你們說過，我們的保費運費比上一季減少了 700 萬美元。優質運費減少的大部分發生在墨西哥。

The team there has done a very good job of getting from fix in to improve. There's a long way to go from an improvement standpoint, but the leadership team down there and our -- the global organization with some specific outside help is really continuing to drive progress there. So it's less about, if you will, an uncontrolled set of problems and more about controlled opportunities down there. Does that make sense to you, John?

那裡的團隊在從修復到改進方面做得非常好。從改進的角度來看，還有很長的路要走，但那裡的領導團隊和我們的全球組織在一些特定的外部幫助下確實在繼續推動那裡的進步。因此，如果你願意的話，這不是一系列不受控制的問題，而是更多關於那裡受控的機會。約翰，這對你來說有意義嗎？

Yeah, it's a start. I get it. Fair enough. And one other question, your reduction in the CapEx spending. Does that represent just lower required spending or change in the timing of that spending from this year to next year?

是的，這是一個開始。我得到它。很公平。另一個問題是資本支出的減少。這是否意味著所需支出的減少或從今年到明年支出時間的變化？

Some of both. As I said to you, as we look at customer -- as we look at EV programs or we look at customer needs so part of my background, and you and I haven't had a lot of chance to talk about this, but part of my background is operations and what we do with all these programs is we look at what was the initial capital assumption and where our opportunities for capital efficiency. And we've drawn a lot -- we've drawn driven a lot of productivity in a couple areas, SMT being one of them, where we haven't needed to make investments that were originally planned. So some of it is actually capital spend reduction and others of it are timing change based on where customer programs go.

兩者都有一些。正如我對你說的，當我們關注客戶時，當我們關注電動車項目或客戶需求時，這是我背景的一部分，你和我沒有太多機會談論這個，但一部分我的背景是運營，我們對所有這些計劃所做的就是研究初始資本假設是什麼以及我們提高資本效率的機會。我們已經吸引了很多——我們在幾個領域提高了生產力，SMT 就是其中之一，我們不需要在這些領域進行最初計劃的投資。因此，其中一些實際上是資本支出的減少，而另一些則是根據客戶專案的進度進行的時間變化。

All right. And I guess one last question to bother everybody here. The cash outflow was kind of sizable in the quarter. Will we be able to recapture that with cash inflows by the end of the fiscal year or will be a net cash outflow year?

好的。我想最後一個問題會困擾這裡的每個人。本季現金流出規模相當大。我們是否能夠在本財年結束時透過現金流入重新獲得這一點，或者將成為淨現金流出年度？

Yeah, we are certainly looking to reverse some of that cash outflow in the next two quarters. And we certainly expect to be approaching neutral.

是的，我們當然希望在未來兩季扭轉部分現金流出。我們當然希望接近中性。

Fair enough. Perfect. Thank you very much.

很公平。完美的。非常感謝。

Thank you. As we have no further questions on the lines at this time, I would like to hand the call back over to Mr. DeGaynor for any closing comments.

謝謝。由於目前我們沒有進一步的問題，我想將電話轉回德蓋納先生以徵求結束意見。

Yes. Thank you, operator. And thank you to everybody who joined us on the call today. Thanks for your interest and for your questions. We look forward to updating you on our Q3 call and once again, we appreciate all your interest in the company.

是的。謝謝你，接線生。感謝今天加入我們電話會議的所有人。感謝您的關注與提問。我們期待向您通報第三季電話會議的最新情況，並再次感謝您對公司的興趣。

Thank you. Ladies and gentlemen, this does conclude today's call, and you may disconnect your lines at this time and we thank you for your participation.

謝謝。女士們、先生們，今天的電話會議到此結束，此時您可以掛斷電話，我們感謝您的參與。