Methode Electronics(MEI) - 2025 Q1 - Quarterly Report

Financial Performance - Net sales decreased by $31.2 million, or 10.8$258.5 million for the three months ended July 27, 2024, compared to $289.7 million for the same period in 2023[78] - Cost of products sold decreased by$21.8 million, or 9.2%, to $213.9 million, representing 82.7$18.3 million for the three months ended July 27, 2024, compared to net income of $0.9 million in the same period of 2023[87] Segment Performance - Automotive segment net sales decreased by$23.5 million, or 14.8%, to $134.8 million, with gross profit decreasing by$6.7 million, or 43.8%, to $8.6 million[88] - Industrial segment net sales decreased by$3.9 million, or 3.4%, to $111.5 million, primarily due to lower sales volumes for lighting products[88] - Automotive net sales decreased to$134.8 million in the three months ended July 27, 2024, down from $158.3 million in the same period last year, representing a decline of 14.9$8.6 million, or 6.4% of net sales, compared to $15.3 million and 9.7$111.5 million, down 3.4% from $115.4 million in the same period last year[90] - Industrial segment income from operations dropped by 30.2$16.9 million, primarily due to lower gross profit and increased selling and administrative expenses[91] - Interface segment net sales fell by 19.7% to $12.2 million, driven by lower sales volumes of touch panels and transceivers[91] Expenses and Costs - Selling and administrative expenses increased by$1.7 million, or 3.8%, to $46.2 million, accounting for 17.9$4.8 million for the three months ended July 27, 2024, compared to $2.8 million in the same period of 2023, due to higher borrowings and interest rates[84] - Income tax expense was$5.2 million with a -39.7% effective tax rate for the three months ended July 27, 2024, compared to $0.1 million with a 10.0$3.5 million in expenses for consulting services provided by AlixPartners during the three months ended July 27, 2024[78] Cash Flow and Financing - Cash and cash equivalents at the end of the period were $111.3 million, down from$147.9 million at the end of the previous year, reflecting a decrease of 24.6%[96] - Net cash provided by operating activities improved to $10.9 million, compared to a net cash used of$5.6 million in the same period last year[97] - Net cash used in investing activities was $13.6 million for the three months ended July 27, 2024, compared to$13.8 million for the same period in 2023[98] - Net cash used in financing activities was $48.2 million for the three months ended July 27, 2024, compared to net cash provided of$12.5 million in the same period in 2023[98] - Cash dividends paid were $5.1 million for the three months ended July 27, 2024, slightly down from$5.3 million in the same period in 2023[98] - Net repayments of borrowings amounted to $39.1 million for the three months ended July 27, 2024, compared to net proceeds from borrowings of$31.9 million in the same period in 2023[98] - The company incurred $1.8 million in debt issuance costs associated with the Second Amendment during the three months ended July 27, 2024[98] - As of July 27, 2024, the outstanding balance under the revolving credit facility was$298.6 million, with compliance maintained for all covenants in the Amended Credit Agreement[95] - The company has a new share buyback authorization of up to $200.0 million, effective from June 17, 2024, following the completion of the previous buyback program[94] Internal Controls and Risks - The company reported material weaknesses in internal controls over financial reporting as of July 27, 2024, affecting the reliability of financial statements[102] - Management identified ineffective controls over IT general controls and goodwill impairment analyses, which could lead to potential misstatements[102] - Remediation efforts are underway to enhance internal controls, including training programs and improved design of controls over IT change management[102] - There were no off-balance sheet arrangements as defined under SEC rules[100] - The company is exposed to market risks from foreign currency exchange, interest rates, and commodity prices, with no significant changes in exposure reported during the three months ended July 27, 2024[101]