About Methode Electronics, Inc. Methode Electronics, Inc. (NYSE: MEI) is a leading global supplier of custom-engineered solutions with sales, engineering and manufacturing locations in North America, Europe, Middle East and Asia. We design, engineer, and produce mechatronic products for OEMs utilizing our broad range of technologies for user interface, LED lighting system, power distribution and sensor applications. CHICAGO, June 13, 2024 (GLOBE NEWSWIRE) -- Methode Electronics, Inc. (NYSE: MEI), a leading ...

Investment Thesis - Methode Electronics is undervalued due to its heavy reliance on the automotive industry, which has seen a 70% stock price decline over the past year, but the company is positioned to benefit from the transition to electric vehicles (EVs) [2][4][7] Company Overview - Methode Electronics provides mechatronic solutions across three main segments: Automotive (62% of revenue), Industrial (33%), and Interface (5%) [3] - The company has discontinued its Medical segment, which historically represented about 0.4% of net sales [3] Market Conditions - A slowdown in manufacturing activity and price inflation, particularly due to global supply shocks like the chip shortage, has negatively impacted Methode's performance [4][5] - For the nine months ended January 27, 2024, net sales were down 4.7% overall, with a 15.5% decline when excluding acquisitions and favorable currency translations [4] Automotive Segment Performance - The automotive segment experienced a 17.76% decline in net sales for the nine months ended January 27, 2024, with operating income decreasing to a loss of $75.3 million [7] - The slowdown in the automotive industry is attributed to labor strikes, supply shocks, and a weak economy, leading to fewer new programs launched by automotive manufacturers [5][7] Recovery Strategy - Methode's recovery strategy includes both organic growth opportunities in data centers and inorganic growth through acquisitions, such as Nordic Lights, which has contributed $63.3 million to net sales [8][7] - The transition to EVs is expected to create long-term growth opportunities, with EV programs already representing about 20% of net sales [7][8] Financial Performance and Valuation - Methode is trading below the median price-to-book (P/B) and enterprise value-to-sales (EV/Sales) ratios compared to peers, indicating it may be undervalued [9] - A discounted cash flow (DCF) analysis suggests a valuation range of $28.49 to $57.03 per share, representing a potential upside of 142% from current levels [10][11] Management and Operational Challenges - The company is undergoing management reorganization after the retirement of long-time CEO Donald Duda, with interim leadership focusing on restoring profitability [5][4] - Operational inefficiencies and increased interest expenses due to a breach of debt covenants pose challenges to the company's recovery efforts [12]

NEW YORK, May 16, 2024 /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of Methode Electronics Inc. ("Methode" or the "Company") (NYSE: MEI). Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, ext. 7980. The investigation concerns whether Methode and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. [Click here for information about joining the class action] On July 14, 2023, Me ...

Kevin Nystrom Appointed Interim Chief Executive Officer Mark Schwabero Appointed Vice Chairman of the Board CHICAGO, May 06, 2024 (GLOBE NEWSWIRE) -- Methode Electronics, Inc. (NYSE:MEI), a leading global supplier of custom-engineered solutions for user interface, LED lighting system and power distribution applications, announced today that Kevin Nystrom, a partner and managing director at AlixPartners LLP, has been appointed interim CEO, effective immediately. The company has previously disclosed its ongoi ...

Methode Electronics, Inc. (NYSE:MEI) Q3 2024 Earnings Conference Call March 7, 2024 11:00 AM ET Company Participants Robert Cherry - Vice President, Investor Relations Avi Avula - President and Chief Executive Officer Ron Tsoumas - Chief Financial Officer Conference Call Participants Luke Junk - Robert W. Baird Gary Prestopino - Barrington Research John Franzreb - Sidoti & Company Operator Greetings. Welcome to the Methode Electronics Third Quarter Fiscal 2024 Results Conference Call. [Operator Instructions ...

Exhibit 99.1 Methode Electronics, Inc. Reports Fiscal 2024 Third Quarter Financial Results Chicago, IL – March 7, 2024 – Methode Electronics, Inc. (NYSE: MEI), a leading global supplier of custom- engineered solutions for user interface, LED lighting and power distribution applications, today announced financial results for the third quarter of fiscal 2024 ended January 27, 2024. Excluding Nordic Lights, selling and administrative expense decreased $1.4 million primarily due to lower stock-based compensatio ...

```markdown PART I. FINANCIAL INFORMATION This part presents the Company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, covering income, balance sheets, equity, and cash flows [Condensed Consolidated Statements of Income (unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(unaudited)) This section provides the unaudited condensed consolidated statements of income for the three and nine months ended January 27, 2024 Consolidated Statements of Income (Three Months Ended) | Metric (in millions) | Jan 27, 2024 | Jan 28, 2023 | | :------------------- | :----------- | :----------- | | Net sales | $259.5 | $280.1 | | Gross profit | $37.0 | $64.9 | | (Loss) income from operations | $(3.0) | $27.3 | | Net (loss) income | $(11.6) | $19.9 | | Basic (loss) income per share | $(0.33) | $0.56 | | Diluted (loss) income per share | $(0.33) | $0.54 | Consolidated Statements of Income (Nine Months Ended) | Metric (in millions) | Jan 27, 2024 | Jan 28, 2023 | | :------------------- | :----------- | :----------- | | Net sales | $837.2 | $878.4 | | Gross profit | $143.3 | $200.8 | | (Loss) income from operations | $(50.5) | $81.9 | | Net (loss) income | $(66.0) | $69.0 | | Basic (loss) income per share | $(1.86) | $1.91 | | Diluted (loss) income per share | $(1.86) | $1.87 | [Condensed Consolidated Statements of Comprehensive Income (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(unaudited)) This section presents the unaudited condensed consolidated statements of comprehensive income for the three and nine months ended January 27, 2024 Consolidated Statements of Comprehensive Income (Three Months Ended) | Metric (in millions) | Jan 27, 2024 | Jan 28, 2023 | | :------------------- | :----------- | :----------- | | Net (loss) income | $(11.6) | $19.9 |\ | Other comprehensive income (loss) | $11.7 | $32.7 |\ | Comprehensive income (loss) | $0.1 | $52.6 | Consolidated Statements of Comprehensive Income (Nine Months Ended) | Metric (in millions) | Jan 27, 2024 | Jan 28, 2023 | | :------------------- | :----------- | :----------- |\ | Net (loss) income | $(66.0) | $69.0 |\ | Other comprehensive income (loss) | $(12.2) | $5.2 |\ | Comprehensive income (loss) | $(78.2) | $74.2 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the condensed consolidated balance sheets as of January 27, 2024, and April 29, 2023 Consolidated Balance Sheets (in millions) | Asset/Liability/Equity | Jan 27, 2024 | April 29, 2023 | | :--------------------- | :----------- | :------------- | | Total current assets | $629.8 | $664.4 | | Total long-term assets | $861.7 | $914.7 | | Total assets | $1,491.5 | $1,579.1 | | Total current liabilities | $229.9 | $228.0 | | Total long-term liabilities | $426.6 | $398.2 | | Total liabilities | $656.5 | $626.2 | | Total shareholders' equity | $835.0 | $941.8 | - **Goodwill decreased** from **$301.9 million** at April 29, 2023, to **$220.4 million** at January 27, 2024, primarily due to a **$56.5 million** impairment charge in the Automotive segment[13](index=13&type=chunk)[56](index=56&type=chunk) - **Inventories increased** from **$159.7 million** to **$204.0 million**, while **cash and cash equivalents decreased** from **$157.0 million** to **$122.9 million**[13](index=13&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20(unaudited)) This section presents the unaudited condensed consolidated statements of shareholders' equity, detailing changes over the nine months Changes in Shareholders' Equity (Nine Months Ended January 27, 2024) | Item | Amount (in millions) | | :-------------------------------- | :------------------- | | Balance as of April 29, 2023 | $941.8 | | Net loss | $(66.0) | | Other comprehensive loss | $(12.2) | | Purchases of common stock | $(10.8) | | Dividends on common stock | $(14.7) | | Balance as of January 27, 2024 | $835.0 | - **Total shareholders' equity decreased** from **$941.8 million** at April 29, 2023, to **$835.0 million** at January 27, 2024, primarily due to a **net loss of $66.0 million**, **other comprehensive loss of $12.2 million**, common stock repurchases of **$10.8 million**, and dividends of **$14.7 million**[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited)](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) This section provides the unaudited condensed consolidated statements of cash flows for the nine months ended January 27, 2024 Consolidated Statements of Cash Flows (Nine Months Ended) | Activity (in millions) | Jan 27, 2024 | Jan 28, 2023 | | :--------------------- | :----------- | :----------- | | Net cash provided by operating activities | $22.6 | $83.8 | | Net cash used in investing activities | $(39.0) | $(27.3) | | Net cash used in financing activities | $(15.0) | $(63.6) | | Decrease in cash and cash equivalents | $(34.1) | $(7.3) | | Cash and cash equivalents at end of period | $122.9 | $164.7 | - **Net cash provided by operating activities significantly decreased** from **$83.8 million** in 2023 to **$22.6 million** in 2024, primarily due to lower net income adjusted for non-cash items and increased inventory[18](index=18&type=chunk)[176](index=176&type=chunk) - **Net cash used in investing activities increased** to **$39.0 million** in 2024 from **$27.3 million** in 2023, driven by higher capital expenditures[18](index=18&type=chunk)[177](index=177&type=chunk) - **Net cash used in financing activities decreased** to **$15.0 million** in 2024 from **$63.6 million** in 2023, mainly due to lower common stock repurchases and net borrowings compared to net repayments[18](index=18&type=chunk)[178](index=178&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the condensed consolidated financial statements, explaining significant accounting policies [Note 1. Description of Business and Summary of Significant Accounting Policies](index=14&type=section&id=Note%201.%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes Methode Electronics, Inc.'s global business as a supplier of custom engineered mechatronic products and its accounting policies - Methode Electronics, Inc. is a global supplier of custom engineered mechatronic products for user interface, LED lighting, power distribution, and sensor applications[20](index=20&type=chunk) - The Company's solutions serve end markets including transportation (automotive, commercial vehicle, e-bike, aerospace, bus, rail), cloud computing infrastructure, construction equipment, and consumer appliances[21](index=21&type=chunk) - The Company adopted ASU No. 2021-08 in fiscal 2024, which did not materially impact financial statements, and is evaluating ASU No. 2023-07 (Segment Reporting) and ASU No. 2023-09 (Income Tax Disclosures) for future impact[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) [Note 2. Revenue](index=15&type=section&id=Note%202.%20Revenue) This note details the Company's revenue recognition policies and disaggregated net sales by segment and geography - The substantial majority of the Company's revenue is recognized at a point in time, typically upon physical shipment or delivery, except for consignment transactions which are recognized upon customer usage[30](index=30&type=chunk) - Revenue for highly customized parts with no alternative use and enforceable payment rights is recognized over time based on progress[31](index=31&type=chunk) Disaggregated Net Sales by Segment and Geography (Three Months Ended January 27, 2024) | Segment | North America | EMEA | Asia | Total Net Sales | | :-------- | :------------ | :--- | :--- | :-------------- | | Automotive | $56.7 | $52.0 | $31.0 | $139.7 | | Industrial | $45.6 | $37.5 | $24.0 | $107.1 | | Interface | $12.7 | — | — | $12.7 | | Medical | — | — | — | — | | **Total** | **$115.0** | **$89.5** | **$55.0** | **$259.5** | Disaggregated Net Sales by Segment and Geography (Nine Months Ended January 27, 2024) | Segment | North America | EMEA | Asia | Total Net Sales | | :-------- | :------------ | :--- | :--- | :-------------- | | Automotive | $194.4 | $153.9 | $104.0 | $452.3 | | Industrial | $137.6 | $131.4 | $73.9 | $342.9 | | Interface | $39.6 | — | — | $39.6 | | Medical | $2.3 | — | $0.1 | $2.4 | | **Total** | **$373.9** | **$285.3** | **$178.0** | **$837.2** | [Note 3. Acquisition and Disposition](index=17&type=section&id=Note%203.%20Acquisition%20and%20Disposition) This note outlines the acquisition of Nordic Lights Group Corporation and the disposition of the Dabir business - Methode acquired **100%** of Nordic Lights Group Corporation, a premium lighting solutions provider, for **€131.8 million** (**$145.1 million**) by October 10, 2023. Nordic Lights' results are reported within the Industrial segment[38](index=38&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk) Nordic Lights Acquisition - Fair Value of Net Assets Acquired (in millions) | Asset/Liability | As of January 27, 2024 | | :---------------- | :--------------------- | | Identifiable intangible assets | $95.3 | | Goodwill | $45.3 | | Total fair value of net assets acquired | $145.5 | | Total purchase price | $134.2 | - The Company disposed of its Dabir business in the Medical segment on October 13, 2023, for **$1.5 million**, recognizing a **$0.6 million** loss on sale[45](index=45&type=chunk) [Note 4. Income Taxes](index=19&type=section&id=Note%204.%20Income%20Taxes) This note provides details on income tax expense, effective tax rates, and unrecognized income tax benefits Income Tax Expense and Effective Tax Rate | Period | Pre-tax (loss) income (in millions) | Income tax expense (in millions) | Effective tax rate | | :----- | :-------------------------------- | :------------------------------- | :----------------- | | 3 Months Ended Jan 27, 2024 | $(10.5) | $1.1 | (10.5)% | | 3 Months Ended Jan 28, 2023 | $23.0 | $3.1 | 13.5% | | 9 Months Ended Jan 27, 2024 | $(65.0) | $1.0 | (1.5)% | | 9 Months Ended Jan 28, 2023 | $82.3 | $13.3 | 16.2% | - The **effective tax rate** for the three and nine months ended January 27, 2024, was lower than the U.S. federal statutory rate of **21%** primarily due to foreign operations with lower tax rates and research deductions, offset by global intangible low-tax income. The nine-month rate was also impacted by a non-deductible goodwill impairment[48](index=48&type=chunk) - Gross unrecognized income tax benefits were **$4.6 million** as of January 27, 2024, with accrued interest and penalties of **$0.4 million**[49](index=49&type=chunk) [Note 5. Balance Sheet Components](index=21&type=section&id=Note%205.%20Balance%20Sheet%20Components) This note provides detailed breakdowns of inventories, property, plant and equipment, and pre-production tooling costs Inventories (in millions) | Category | Jan 27, 2024 | April 29, 2023 | | :--------- | :----------- | :------------- | | Finished products | $53.2 | $36.6 | | Work in process | $17.8 | $14.4 | | Raw materials | $133.0 | $108.7 | | **Total inventories** | **$204.0** | **$159.7** | Property, Plant and Equipment, Net (in millions) | Category | Jan 27, 2024 | April 29, 2023 | | :--------- | :----------- | :------------- | | Total property, plant and equipment, gross | $582.2 | $556.7 | | Less: accumulated depreciation | $(349.7) | $(336.4) | | **Property, plant and equipment, net** | **$232.5** | **$220.3** | - **Pre-production tooling costs related to customer-owned tools, for which reimbursement is guaranteed, increased** to **$47.8 million** at January 27, 2024, from **$36.1 million** at April 29, 2023[54](index=54&type=chunk) [Note 6. Goodwill and Other Intangible Assets](index=23&type=section&id=Note%206.%20Goodwill%20and%20Other%20Intangible%20Assets) This note details goodwill by segment and other intangible assets, including impairment charges and amortization Goodwill by Segment (in millions) | Segment | Jan 27, 2024 | April 29, 2023 | | :-------- | :----------- | :------------- | | Grakon Industrial | $124.8 | $124.5 | | North American Automotive | $49.4 | $99.8 | | Nordic Lights | $44.6 | $69.6 | | European Automotive | — | $6.4 | | Other | $1.6 | $1.6 | | **Total** | **$220.4** | **$301.9** | - A **non-cash goodwill impairment charge of $56.5 million** was recognized in the three months ended October 28, 2023, for the North American Automotive (**$50.4 million**) and European Automotive (**$6.1 million**) reporting units due to a sustained decrease in share price, market capitalization, and lower-than-expected operating results[57](index=57&type=chunk)[58](index=58&type=chunk) Other Intangible Assets, Net (in millions) | Category | Gross | Accumulated Amortization | Net | Weighted Average Remaining Useful Life (Years) | | :-------------------------------- | :---- | :----------------------- | :-- | :------------------------------------------- | | Customer relationships and agreements | $308.2 | $(80.7) | $227.5 | 15.1 | | Trade names, patents and technology licenses | $75.7 | $(40.7) | $35.0 | 7.0 | | Unamortized trade name | $1.8 | — | $1.8 | — | | **Total** | **$385.7** | **$(121.4)** | **$264.3** | | [Note 7. Derivative Instruments and Hedging Activities](index=25&type=section&id=Note%207.%20Derivative%20Instruments%20and%20Hedging%20Activities) This note explains the Company's use of derivative financial instruments for managing foreign currency and interest rate exposures - The **Company uses derivative financial instruments**, including cross-currency swaps and foreign currency-denominated debt, to manage exposure to foreign currency exchange rates and interest rates, designating them as net investment hedges or cash flow hedges[63](index=63&type=chunk)[65](index=65&type=chunk)[70](index=70&type=chunk) - A fixed-rate, cross-currency swap with a notional value of **$60.0 million** (**€54.8 million**) was entered into on December 21, 2023, maturing December 25, 2024, to hedge net investment in a euro-based subsidiary[67](index=67&type=chunk) - The Company also uses short-term foreign currency forward contracts, not designated as hedges, to reduce earnings impact from exchange rate fluctuations on non-functional currency balance sheet exposures[72](index=72&type=chunk) Effect of Derivative Instruments on Comprehensive Income (Loss) (in millions) | Period | Net investment hedges | Interest rate swaps | Total | | :----- | :-------------------- | :------------------ | :---- | | 3 Months Ended Jan 27, 2024 | $0.3 | $(3.1) | $(2.8) | | 9 Months Ended Jan 27, 2024 | $1.5 | $(5.8) | $(4.3) | [Note 8. Debt](index=26&type=section&id=Note%208.%20Debt) This note summarizes the Company's debt, including revolving credit facilities and compliance with debt covenants Debt Summary (in millions) | Category | Jan 27, 2024 | April 29, 2023 | | :--------- | :----------- | :------------- | | Revolving credit facility | $332.6 | $305.4 | | Other debt | $1.5 | $4.7 | | Unamortized debt issuance costs | $(2.8) | $(3.3) | | **Total debt** | **$331.3** | **$306.8** | | Less: current maturities | $(0.2) | $(3.2) | | **Total long-term debt** | **$331.1** | **$303.6** | - The **Company was not in compliance with its consolidated leverage ratio covenant** for the quarter ended January 27, 2024, but subsequently entered into an Amendment on March 6, 2024, which modified the covenant and waived the default, bringing the Company into compliance[78](index=78&type=chunk)[81](index=81&type=chunk) - As of January 27, 2024, the weighted-average interest rate on outstanding US dollar borrowings under the Credit Agreement was approximately **7.4%**, and euro-denominated borrowings was approximately **5.9%**[81](index=81&type=chunk) [Note 9. Shareholders' Equity](index=28&type=section&id=Note%209.%20Shareholders'%20Equity) This note details share buyback activity and stock-based compensation expense, impacting total shareholders' equity Share Buyback Activity (Nine Months Ended) | Metric | Jan 27, 2024 | Jan 28, 2023 | | :-------------------------- | :----------- | :----------- | | Shares purchased | 453,371 | 1,005,514 | | Average price per share | $23.73 | $39.34 | | Total cost (in millions) | $10.8 | $39.6 | - As of January 27, 2024, **$69.9 million remained available for share repurchases** under the **$200.0 million** share buyback program, which is authorized through June 14, 2024[84](index=84&type=chunk) Stock-Based Compensation Expense (in millions) | Category | 3 Months Ended Jan 27, 2024 | 9 Months Ended Jan 27, 2024 | | :--------- | :-------------------------- | :-------------------------- | | RSUs | $(2.1) | $0.2 | | Deferred non-employee director awards | — | $1.0 | | Non-employee director awards | — | $0.6 | | **Total** | **$(2.1)** | **$1.8** | - A net reversal of **$2.1 million** in RSU stock-based compensation expense occurred in the three months ended January 27, 2024, due to **$3.6 million** in forfeitures[94](index=94&type=chunk) [Note 10. (Loss) Income per Share](index=31&type=section&id=Note%2010.%20(Loss)%20Income%20per%20Share) This note presents basic and diluted (loss) income per share calculations, including factors affecting anti-dilutive shares Basic and Diluted (Loss) Income per Share | Metric | 3 Months Ended Jan 27, 2024 | 3 Months Ended Jan 28, 2023 | 9 Months Ended Jan 27, 2024 | 9 Months Ended Jan 28, 2023 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net (loss) income attributable to Methode (in millions) | $(11.6) | $19.9 | $(66.0) | $69.0 | | Basic (loss) income per share | $(0.33) | $0.56 | $(1.86) | $1.91 | | Diluted (loss) income per share | $(0.33) | $0.54 | $(1.86) | $1.87 | - For the three and nine months ended January 27, 2024, all potential common shares from stock options and RSUs were excluded from diluted EPS calculation as their inclusion would have been anti-dilutive[96](index=96&type=chunk) [Note 11. Segment Information](index=32&type=section&id=Note%2011.%20Segment%20Information) This note provides detailed financial information for the Company's Automotive, Industrial, Interface, and Medical operating segments - Methode operates in four segments: Automotive (electronic/electro-mechanical devices for OEMs), Industrial (lighting, controls, power products), Interface (copper/fiber-optic solutions), and Medical (Dabir Surfaces, which has been discontinued)[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) Segment Net Sales (Three Months Ended January 27, 2024, in millions) | Segment | Net Sales | | :-------- | :-------- | | Automotive | $139.7 | | Industrial | $107.1 | | Interface | $12.7 | | Medical | — | | **Total** | **$259.5**| Segment Income (Loss) from Operations (Nine Months Ended January 27, 2024, in millions) | Segment | Income (Loss) from Operations | | :-------- | :---------------------------- | | Automotive | $(75.3) | | Industrial | $68.8 | | Interface | $5.4 | | Medical | $(3.0) | | **Total** | **$(50.5)** | Identifiable Assets by Segment (in millions) | Segment | Jan 27, 2024 | April 29, 2023 | | :-------- | :----------- | :------------- | | Automotive | $648.7 | $700.2 | | Industrial | $632.6 | $672.3 | | Interface | $105.1 | $127.2 | | Medical | $0.2 | $6.2 | | Eliminations/Corporate | $104.9 | $73.2 | | **Total** | **$1,491.5** | **$1,579.1** | [Note 12. Contingencies](index=35&type=section&id=Note%2012.%20Contingencies) This note discusses ongoing litigation, including the judgment against the Fuchs companies and uncertainties regarding its collectability - The **Company is involved in ongoing litigation** against the Fuchs companies (Hetronic Germany-GmbH and Hydronic-Steuersysteme-GmbH) for material breaches of agreements, with a jury verdict in 2020 awarding approximately **$102 million** in compensatory damages and **$11 million** in punitive damages[105](index=105&type=chunk)[106](index=106&type=chunk) - The lawsuit is currently in further proceedings after the Supreme Court vacated a Tenth Circuit decision and remanded the matter. The **Company's ability to collect the judgment is uncertain**, especially given the insolvency filings of Abitron Germany and Hetronic Germany in late 2023[106](index=106&type=chunk)[107](index=107&type=chunk) [Note 13. Restructuring](index=36&type=section&id=Note%2013.%20Restructuring) This note details restructuring costs incurred, primarily related to the discontinuation of the Dabir business Restructuring Costs (in millions) | Segment | 3 Months Ended Jan 27, 2024 | 9 Months Ended Jan 27, 2024 | | :-------- | :-------------------------- | :-------------------------- | | Automotive | — | $0.2 | | Industrial | $0.1 | $0.1 | | Medical | — | $1.1 | | **Total** | **$0.1** | **$1.4** | - **Restructuring costs** for the nine months ended January 27, 2024, totaled **$1.4 million**, primarily related to the discontinuation of the Dabir business in the Medical segment (**$0.5 million** severance, **$0.6 million** fixed asset impairment) and severance/asset impairments in Automotive and Industrial segments[109](index=109&type=chunk)[110](index=110&type=chunk) [Note 14. Subsequent Events](index=36&type=section&id=Note%2014.%20Subsequent%20Events) This note describes significant events occurring after the balance sheet date, including changes in executive leadership - On January 29, 2024, Avinash Avula joined the Company as President and CEO and a Board member. Donald W. Duda, former CEO, will retire on April 30, 2024, and serve as a strategic consultant for nine months[111](index=111&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition, results of operations, and key factors impacting performance - The Company is a global supplier of custom engineered mechatronic products for user interface, LED lighting, power distribution, and sensor applications across transportation, cloud computing, construction, and consumer appliance markets[116](index=116&type=chunk)[117](index=117&type=chunk) - Macroeconomic conditions, global supply chain disruptions (especially semiconductor shortages), and geopolitical conflicts (Russia-Ukraine, Israel-Hamas wars) continue to impact the Company's operations, costs, and demand[119](index=119&type=chunk)[120](index=120&type=chunk) - The acquisition of Nordic Lights contributed **$21.2 million** and **$63.3 million** to net sales in the three and nine months ended January 27, 2024, respectively, within the Industrial segment[124](index=124&type=chunk)[125](index=125&type=chunk) [Overview](index=38&type=section&id=Overview) This overview describes Methode Electronics, Inc. as a global supplier of custom engineered mechatronic products across various end markets - Methode Electronics, Inc. is a global supplier of custom engineered solutions, designing and producing mechatronic products for OEMs in user interface, LED lighting, power distribution, and sensor applications[116](index=116&type=chunk) - The Company's solutions are utilized in transportation (automotive, commercial vehicle, e-bike, aerospace, bus, rail), cloud computing infrastructure, construction equipment, and consumer appliance end markets[117](index=117&type=chunk) - The Dabir business in the Medical segment was discontinued, with assets sold in October 2023[118](index=118&type=chunk) [Consolidated Results of Operations](index=39&type=section&id=Consolidated%20Results%20of%20Operations) This section analyzes the Company's consolidated financial performance, including net sales, gross profit, and net income (loss) Consolidated Financial Performance (in millions) | Metric | 3 Months Ended Jan 27, 2024 | 3 Months Ended Jan 28, 2023 | 9 Months Ended Jan 27, 2024 | 9 Months Ended Jan 28, 2023 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net sales | $259.5 | $280.1 | $837.2 | $878.4 | | Cost of products sold | $222.5 | $215.2 | $693.9 | $677.6 | | Gross profit | $37.0 | $64.9 | $143.3 | $200.8 | | Selling and administrative expenses | $33.9 | $32.9 | $119.3 | $104.8 | | Goodwill impairment | — | — | $56.5 | — | | Net (loss) income | $(11.6) | $19.9 | $(66.0) | $69.0 | - **Net sales decreased** by **7.4%** for the three months and **4.7%** for the nine months, primarily due to lower Automotive segment sales volumes from program roll-offs, partially offset by the Nordic Lights acquisition and favorable foreign currency translation[124](index=124&type=chunk)[125](index=125&type=chunk) - **Gross profit margin declined significantly** to **14.3%** (3 months) and **17.1%** (9 months) in fiscal 2024 from **23.2%** and **22.9%** in fiscal 2023, mainly due to lower sales and operational inefficiencies in the Automotive segment[128](index=128&type=chunk)[129](index=129&type=chunk) - The Company reported a **net loss of $11.6 million** for the three months and **$66.0 million** for the nine months ended January 27, 2024, compared to net income in the prior year periods, largely due to lower gross profit, higher interest expense, and a **$56.5 million** goodwill impairment[139](index=139&type=chunk)[140](index=140&type=chunk) [Reportable Operating Segments](index=41&type=section&id=Reportable%20Operating%20Segments) This section provides a detailed analysis of the financial performance of each of the Company's reportable operating segments [Automotive](index=41&type=section&id=Automotive) This section details the Automotive segment's performance, highlighting decreased sales and gross profit margins Automotive Segment Performance (in millions) | Metric | 3 Months Ended Jan 27, 2024 | 3 Months Ended Jan 28, 2023 | 9 Months Ended Jan 27, 2024 | 9 Months Ended Jan 28, 2023 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net sales | $139.7 | $176.5 | $452.3 | $550.0 | | Gross profit | $4.5 | $32.0 | $31.4 | $99.7 | | Gross profit as % of net sales | 3.2% | 18.1% | 6.9% | 18.1% | | (Loss) income from operations | $(11.0) | $18.7 | $(75.3) | $56.8 | - **Automotive net sales decreased** by **20.8%** (3 months) and **17.8%** (9 months), primarily due to program roll-offs in North America and lower sales volumes of sensor products in EMEA and overhead consoles/lead-frame assemblies in Asia[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) - **Gross profit margins in the Automotive segment significantly decreased** due to lower sales volumes and operational inefficiencies in North America, including labor/vendor issues, planning deficiencies, inventory shortages, and unrecoverable spot purchases/premium freight[148](index=148&type=chunk) - The **Automotive segment reported an operating loss of $75.3 million** for the nine months, including a **$56.5 million** goodwill impairment charge[150](index=150&type=chunk) [Industrial](index=44&type=section&id=Industrial) This section analyzes the Industrial segment's performance, noting increased sales driven by the Nordic Lights acquisition Industrial Segment Performance (in millions) | Metric | 3 Months Ended Jan 27, 2024 | 3 Months Ended Jan 28, 2023 | 9 Months Ended Jan 27, 2024 | 9 Months Ended Jan 28, 2023 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net sales | $107.1 | $91.0 | $342.9 | $286.9 | | Gross profit | $30.3 | $30.7 | $103.8 | $94.4 | | Gross profit as % of net sales | 28.3% | 33.7% | 30.3% | 32.9% | | Income from operations | $18.9 | $22.3 | $68.8 | $69.7 | - **Industrial net sales increased** by **17.7%** (3 months) and **19.5%** (9 months), primarily driven by the Nordic Lights acquisition, which contributed **$21.2 million** and **$63.3 million** respectively[153](index=153&type=chunk)[154](index=154&type=chunk) - Excluding Nordic Lights, **Industrial net sales decreased** due to lower demand for power distribution products in EV and data center markets[153](index=153&type=chunk)[154](index=154&type=chunk) - **Gross profit margins decreased** due to product mix and higher operating expenses, despite the increase in net sales[155](index=155&type=chunk)[156](index=156&type=chunk) [Interface](index=45&type=section&id=Interface) This section reviews the Interface segment's performance, showing increased net sales and improved gross profit margins Interface Segment Performance (in millions) | Metric | 3 Months Ended Jan 27, 2024 | 3 Months Ended Jan 28, 2023 | 9 Months Ended Jan 27, 2024 | 9 Months Ended Jan 28, 2023 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net sales | $12.7 | $12.0 | $39.6 | $39.1 | | Gross profit | $2.2 | $1.9 | $7.7 | $6.6 | | Gross profit as % of net sales | 17.3% | 15.8% | 19.4% | 16.9% | | Income from operations | $1.5 | $1.0 | $5.4 | $4.2 | - **Interface net sales increased** by **5.8%** (3 months) and **1.3%** (9 months), primarily due to higher sales volumes of appliance products, partially offset by lower data solution product sales[160](index=160&type=chunk)[161](index=161&type=chunk) - **Gross profit margins improved** due to higher sales volumes of appliance products[162](index=162&type=chunk)[163](index=163&type=chunk) - **Income from operations increased** by **50.0%** (3 months) and **28.6%** (9 months) due to higher gross profit and lower selling and administrative expenses[164](index=164&type=chunk)[165](index=165&type=chunk) [Medical](index=45&type=section&id=Medical) This section covers the Medical segment's performance, noting its discontinuation and the sale of Dabir business assets Medical Segment Performance (in millions) | Metric | 3 Months Ended Jan 27, 2024 | 3 Months Ended Jan 28, 2023 | 9 Months Ended Jan 27, 2024 | 9 Months Ended Jan 28, 2023 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net sales | — | $0.6 | $2.4 | $2.4 | | Gross profit | $(0.1) | $(0.2) | $(0.2) | $(0.5) | | Loss from operations | $(0.1) | $(1.8) | $(3.0) | $(4.7) | - The **Medical segment, consisting entirely of the Dabir business, has been discontinued**. The Company sold certain assets of the Dabir business towards the end of the second quarter of fiscal 2024[166](index=166&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=47&type=section&id=Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) This section discusses the Company's liquidity, capital resources, cash balances, and compliance with debt covenants - The **Company's liquidity is primarily derived from cash flows from operations**, existing cash balances, and borrowings under its senior unsecured credit agreement, which are used to fund business operations, capital expenditures, working capital, debt service, dividends, and stock repurchases[167](index=167&type=chunk) - As of January 27, 2024, **cash and cash equivalents totaled $122.9 million**, with **$93.9 million** held by non-U.S. subsidiaries, which can be repatriated without material additional income tax expense[168](index=168&type=chunk) - The **Company was not in compliance with its consolidated leverage ratio covenant** as of January 27, 2024, but an amendment on March 6, 2024, modified the covenant and waived the default, restoring compliance[171](index=171&type=chunk)[172](index=172&type=chunk) - As of January 27, 2024, **$69.9 million remained available for share repurchases** under the **$200.0 million** program authorized through June 14, 2024[169](index=169&type=chunk) [Cash Flows](index=47&type=section&id=Cash%20Flows) This section analyzes the Company's cash flows from operating, investing, and financing activities Cash Flow Summary (Nine Months Ended, in millions) | Activity | Jan 27, 2024 | Jan 28, 2023 | | :------------------------------------------ | :----------- | :----------- | | Net cash provided by operating activities | $22.6 | $83.8 | | Net cash used in investing activities | $(39.0) | $(27.3) | | Net cash used in financing activities | $(15.0) | $(63.6) | | Decrease in cash and cash equivalents | $(34.1) | $(7.3) | | Cash and cash equivalents at end of the period | $122.9 | $164.7 | - **Operating cash flow decreased significantly** due to lower net income (adjusted for non-cash items) and increased inventory[176](index=176&type=chunk) - **Investing cash flow increased** due to higher capital expenditures (**$41.1 million** in 2024 vs. **$30.8 million** in 2023)[177](index=177&type=chunk) - **Financing cash flow improved** due to lower share repurchases (**$10.8 million** in 2024 vs. **$39.6 million** in 2023) and net borrowings of **$25.7 million** compared to net repayments of **$6.6 million**[178](index=178&type=chunk) [Legal Matters](index=49&type=section&id=Legal%20Matters) This section discusses ongoing legal proceedings, including the judgment against the Fuchs companies and its uncertain collectability - The **Company is pursuing a $113 million judgment** against the Fuchs companies (Hetronic Germany-GmbH and Hydronic-Steuersysteme-GmbH) for material breaches of agreements, which is currently in further proceedings following a Supreme Court remand[181](index=181&type=chunk)[182](index=182&type=chunk) - The **enforceability and collectability of the judgment are uncertain**, particularly due to the insolvency filings of Abitron Germany and Hetronic Germany in late 2023[183](index=183&type=chunk) - **Hetronic-related legal fees incurred were $1.5 million** for the nine months ended January 27, 2024, compared to **$2.5 million** in the prior year[184](index=184&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section addresses the Company's exposure to market risks from foreign currency, interest rates, and commodities - Methode is exposed to market risks from foreign currency exchange rates, interest rates, and commodity prices[185](index=185&type=chunk) - The **Company uses derivative financial instruments to manage a portion of these risks**, strictly avoiding speculative or trading purposes[185](index=185&type=chunk) - **No significant change in market risk exposure occurred** during the nine months ended January 27, 2024[186](index=186&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of disclosure controls and procedures, noting a material weakness in the Automotive segment - The **Company's disclosure controls and procedures were not effective** as of January 27, 2024, due to a material weakness[187](index=187&type=chunk) - The **material weakness relates to ineffective review, approval, and validation controls** over pricing data and non-standard contract terms at a business unit in the Automotive segment[189](index=189&type=chunk) - **Remediation efforts include adding internal controls** over pricing data and non-standard contract terms, and developing additional training programs. The material weakness will be considered remediated once controls operate effectively for a sufficient period[190](index=190&type=chunk)[191](index=191&type=chunk) - Despite the material weakness, **management believes the condensed consolidated financial statements fairly present** the Company's financial condition, results of operations, and cash flows[188](index=188&type=chunk) PART II. OTHER INFORMATION This part includes other information such as risk factors, equity sales, defaults, and exhibits [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) This section states no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K - **No material changes to the risk factors** previously disclosed in the Annual Report on Form 10-K for the year ended April 29, 2023[193](index=193&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's share buyback program, including shares purchased and remaining authorization - The **Board of Directors authorized a program to purchase up to $200.0 million** of common stock through June 14, 2024[194](index=194&type=chunk) - As of January 27, 2024, **$130.1 million of common stock had been purchased and retired** under the program[194](index=194&type=chunk) Share Buyback Activity (Three Months Ended January 27, 2024) | Period | Total number of shares purchased | Average price paid per share | Approximate dollar value of shares that may yet be purchased (in millions) | | :----------------------------------- | :----------------------------- | :--------------------------- | :----------------------------------------------------------------------- | | October 29, 2023 through November 25, 2023 | 68,000 | $23.57 | $71.3 | | November 26, 2023 through December 30, 2023 | 28,061 | $23.88 | $70.7 | | December 31, 2023 through January 27, 2024 | 34,592 | $21.14 | $69.9 | [Item 3. Defaults Upon Senior Securities](index=53&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section refers to information on defaults upon senior securities, incorporated by reference from the debt note - **Information regarding defaults upon senior securities is incorporated by reference** from Note 8, 'Debt,' in the condensed consolidated financial statements[196](index=196&type=chunk) [Item 5. Other Information](index=53&type=section&id=Item%205.%20Other%20Information) This section confirms no director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - **No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement** during the last fiscal quarter[197](index=197&type=chunk) [Item 6. Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including executive agreements, certifications, and XBRL documents - **Exhibits include offer letters and change in control agreements** for Avinash Avula and Kevin M. Martin, and Kerry A. Vyverberg[198](index=198&type=chunk) - **Certifications from the Principal Executive Officer and Principal Financial Officer** (Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350) are included[198](index=198&type=chunk) - XBRL Instance Document, Taxonomy Schema, and Cover Page Interactive Data File are provided[198](index=198&type=chunk) [SIGNATURES](index=55&type=section&id=SIGNATURES) This section contains the official signatures for the report, confirming its due authorization and filing - The **report was duly signed on behalf of Methode Electronics, Inc. by Ronald L.G. Tsoumas, Chief Financial Officer, on March 7, 2024**[202](index=202&type=chunk) ```

Financial Data and Key Metrics Changes - Second quarter net sales were $288 million, a decrease of 9% from $315.9 million in fiscal '23, primarily due to program roll-offs and market challenges [10][22] - Loss from operations was $51.3 million, down from an income of $32.8 million in fiscal '23, largely due to a goodwill impairment charge of $56.5 million [11][23] - Second quarter diluted earnings per share decreased to a negative $1.55 from a positive $0.75 in the same period last fiscal year [23] - Free cash flow was negative $11.3 million compared to a positive $7 million in fiscal '23, primarily due to reduced net income and increased capital expenditures [25] Business Line Data and Key Metrics Changes - The auto segment faced significant challenges, including a non-cash goodwill impairment of $57 million related to North American and European operations [3][11] - Sales from electric vehicle (EV) programs accounted for 19% of consolidated total sales, with over $50 million in annual EV program awards won in the quarter [18] - The e-bike market continued to show weakness, with lower sales for e-bike sensors expected to persist due to overstocked inventory [22] Market Data and Key Metrics Changes - The company experienced operational inefficiencies in North American auto operations, which were exacerbated by personnel turnover and vendor issues [16][17] - The Nordic Lights acquisition contributed $20.9 million to sales, indicating a positive impact from this strategic move [10] - The company noted substantial price cost pressure during the year, which is being addressed through pricing and cost improvement initiatives [19] Company Strategy and Development Direction - The company is focused on launching over 20 new programs this year, requiring significant investment and resources, with the aim of a clean start to fiscal '25 [7][20] - The strategic direction includes a strong emphasis on lighting and power solutions to drive business growth [8] - The company plans to resume share buybacks, having repurchased nearly $8 million in shares during the quarter [6] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that fiscal '24 is a pivotal year of investment and transition, with expectations for modest improvement in the second half of the fiscal year [7][12] - The outlook for fiscal '25 remains positive, supported by strong awards, but is dependent on EV OEM launch schedules and market recovery in e-bikes and commercial vehicles [20][26] - Management expressed confidence in the long-term growth of the EV market, despite near-term challenges related to program delays and take rate projections [20] Other Important Information - The expected net sales range for fiscal '25 has been revised down to $1.150 billion to $1.250 billion, primarily due to EV customer program delays [26] - The expected income from operations as a percentage of net sales for fiscal '25 is now projected to be 6% to 8%, down from 11% to 12% [26] Q&A Session Summary Question: What changed in expectations or actions not having the desired effect? - Management admitted to being overly optimistic about the timeline for corrective actions and acknowledged that operational issues were more complex than initially anticipated [29] Question: How are updated expectations for EV volumes incorporated into guidance? - Management conducted a deep dive into forecasting, considering customer feedback and market trends, which contributed to the revised guidance [54] Question: What was the trigger for the goodwill impairment? - The impairment was triggered when the market cap fell below the book value, necessitating a reassessment of goodwill [40][63]

FISCAL 2024 SECOND QUARTER FINANCIAL RESULTS December 7, 2023 This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect, when made, our current views with respect to current events and financial performance. Such forward-looking statements are subject to many risks, uncertainties and factors relating to our operations and business environment, which may cause our actual results to be materially different from any future resu ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended October 28, 2023 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ______ to ______ Commission file number 001-33731 METHODE ELECTRONICS, INC. (Exact name of registrant as specified in its charter) Delaware ...