Methode Electronics Reports Mixed Financial Results for Three and Six Months Ended November 2, 2024

Methode Electronics, Inc. reported its financial results for the three and six months ended November 2, 2024, revealing a mixed performance compared to the previous fiscal period. For the three months, net sales increased by 1.6% to $292.6 million, up from $288.0 million in the same period last year. However, for the six months, net sales decreased by 4.6% to $551.1 million, down from $577.7 million. The company experienced a net loss of $1.6 million for the quarter, a significant improvement from a loss of $55.3 million in the prior year, while the six-month net loss was $19.9 million compared to $54.4 million in the previous year.

The financial performance was influenced by several factors, including a goodwill impairment charge of $56.5 million recorded in the prior year, which did not recur in the current period. The Automotive segment saw a decline in sales, attributed to the roll-off of legacy programs, while the Industrial segment reported increased sales volumes, particularly in power distribution products. The gross profit margin improved to 19.8% for the quarter, compared to 18.2% in the previous year, driven by a favorable product mix and lower operating expenses.

In terms of strategic developments, Methode Electronics has initiated the discontinuation of its Dabir business within the Medical segment, selling certain assets and contracts for $1.5 million. The company has also been actively managing its operational costs, with selling and administrative expenses rising due to higher professional fees and incentive compensation, which included $5.4 million for consulting services from AlixPartners. The total employee headcount remains stable, with no significant changes reported.

Looking ahead, Methode Electronics faces challenges from ongoing geopolitical tensions, supply chain disruptions, and inflationary pressures that could impact its operations and financial performance. The company has acknowledged the slower-than-expected adoption of electric vehicles, which may affect future sales. Despite these challenges, Methode remains committed to enhancing its internal controls and addressing previously identified material weaknesses in its financial reporting processes. The company believes its liquidity position, bolstered by $97.0 million in cash and cash equivalents, will be sufficient to support its operations and commitments over the next twelve months.