Methode Electronics(MEI) - 2020 Q3 - Quarterly Report

Financial Performance - Consolidated net sales increased by $39.0 million, or 15.8%, to $285.9 million for the three months ended February 1, 2020, compared to $246.9 million for the same period in 2019[113] - Gross profit rose by $15.0 million, or 23.3%, to $79.3 million, representing 27.7% of sales, compared to 26.0% of sales in the prior year[115] - Net income for the three months ended February 1, 2020, was $41.2 million, a 34.2% increase from $30.7 million in the same period last year[113] - Consolidated net sales increased by $79.0 million, or 10.8%, to $813.3 million for the nine months ended February 1, 2020, with the acquisition of Grakon contributing $91.9 million[135] - Net income for the nine months ended February 1, 2020, rose by $24.3 million, or 35.2%, to $93.3 million compared to $69.0 million for the same period in 2019[135] Cost and Expenses - Cost of products sold increased by $24.0 million, or 13.1%, to $206.6 million, which was 72.3% of sales, down from 74.0% in the previous year[114] - Selling and administrative expenses increased slightly by $0.2 million, or 0.6%, to $33.0 million, which is 11.5% of sales, down from 13.3%[116] - Consolidated cost of products sold increased by $50.5 million, or 9.4%, to $589.6 million, accounting for 72.5% of sales in the nine months ended February 1, 2020[136] - Gross profit rose by $28.5 million, or 14.6%, to $223.7 million, representing 27.5% of sales in the nine months ended February 1, 2020[137] - Selling and administrative expenses decreased by $11.7 million, or 10.6%, to $98.6 million, which is 12.1% of sales in the nine months ended February 1, 2020[139] Segment Performance - Automotive segment net sales rose by $37.4 million, or 21.6%, to $210.3 million in the three months ended February 1, 2020, driven by higher sales volumes in North America and Europe[122] - Gross profit for the automotive segment increased by $13.2 million, or 31.6%, to $55.0 million, with gross profit margins improving to 26.2% from 24.2%[124] - Income from operations in the automotive segment increased by $12.2 million, or 45.2%, to $39.2 million, attributed to higher gross profit and cost reduction initiatives[125] - Industrial segment net sales decreased by $0.1 million, or 0.2%, to $60.1 million, with foreign currency translation negatively impacting sales by $0.3 million[126] - Industrial segment gross profit increased by $2.0 million, or 10.1%, to $21.9 million, with gross profit margins rising to 36.4% from 33.1%[127] - Medical segment net sales surged by $0.5 million, or 500.0%, to $0.6 million, reflecting increased product acceptance[132] - Automotive segment net sales increased by $26.8 million, or 4.9%, to $576.6 million in the nine months ended February 1, 2020[146] - Industrial segment net sales increased by $56.0 million, or 40.1%, to $195.8 million in the nine months ended February 1, 2020[150] - Interface segment net sales decreased by $4.3 million, or 9.8%, to $39.7 million in the nine months ended February 1, 2020[153] Cash Flow and Financing - Net cash provided by operating activities increased by $18.3 million to $82.6 million in the nine months ended February 1, 2020, compared to $64.3 million in the prior year[162] - Net cash used in investing activities was $34.4 million in the nine months ended February 1, 2020, significantly lower than $458.3 million in the prior year, primarily due to reduced property, plant, and equipment purchases[163] - Net cash used in financing activities was $49.7 million in the nine months ended February 1, 2020, compared to net cash provided of $232.3 million in the prior year, reflecting net repayments on borrowings[164] - As of February 1, 2020, the company had $244.5 million in principal outstanding under its credit agreement, with a term loan maturing in September 2023[165] Tax and Interest - The effective tax rate was 6.4% for the three months ended February 1, 2020, compared to a benefit of (10.4%) in the same period last year[120] - Interest expense decreased by $0.8 million, or 25.0%, to $2.4 million due to lower levels of outstanding borrowings[118] - A 1% increase in interest rates under the credit agreement would result in an estimated annual interest expense increase of $2.4 million[176] Foreign Currency Impact - The impact of foreign currency translation decreased net sales by $2.2 million, primarily due to the weaker euro and Chinese renminbi[113] - A hypothetical 10% adverse change in foreign currency exchange rates could have impacted income before income taxes by $6.6 million in the nine months ended February 1, 2020[174]