Methode Electronics(US:MEI)2024-12-05 12:05Financial Performance - Net sales increased by $4.6 million, or 1.6%, to $292.6 million for the three months ended November 2, 2024, compared to $288.0 million for the same period in 2023[103]. - Net sales decreased by $26.6 million, or 4.6%, to $551.1 million for the six months ended November 2, 2024, compared to $577.7 million for the same period in 2023[103]. - Net loss decreased to $1.6 million in the three months ended November 2, 2024, from $55.3 million in the same period of 2023[113]. - The company reported a net loss of $19.9 million in the six months ended November 2, 2024, compared to a net loss of $54.4 million in the same period last year[128]. Profitability Metrics - Gross profit margin improved to 19.8% of net sales for the three months ended November 2, 2024, compared to 18.2% for the same period in 2023[105]. - Gross profit for the automotive segment increased by $2.6 million, or 22.4%, to $14.2 million in the three months ended November 2, 2024, with gross profit margins rising to 9.8%[115]. - Industrial segment gross profit increased by $0.1 million, or 0.3%, to $38.0 million in the three months ended November 2, 2024, with gross profit margins decreasing to 28.9%[118]. - Gross profit for the Interface segment rose by $3.3 million, or 173.7%, to $5.2 million in the three months ended November 2, 2024, with gross profit margins increasing to 33.1%[121]. Expenses and Costs - Selling and administrative expenses increased by $1.7 million, or 4.2%, to $42.6 million for the three months ended November 2, 2024, compared to $40.9 million for the same period in 2023[106]. - Interest expense, net rose to $6.2 million for the three months ended November 2, 2024, compared to $4.4 million for the same period in 2023, due to higher borrowings and interest rates[110]. - Other expense, net was $1.6 million for the three months ended November 2, 2024, compared to other income of $0.2 million for the same period in 2023, primarily due to a net foreign exchange loss[111]. - Cost of products sold decreased by $1.0 million, or 0.4%, to $234.7 million for the three months ended November 2, 2024, compared to $235.7 million for the same period in 2023[104]. Segment Performance - Automotive segment net sales decreased by $8.8 million, or 5.7%, to $145.5 million in the three months ended November 2, 2024, compared to $154.3 million in the same period of 2023[115]. - Industrial segment net sales increased by $11.0 million, or 9.1%, to $131.4 million in the three months ended November 2, 2024, compared to $120.4 million in the same period of 2023[118]. - Interface segment net sales increased by $4.0 million, or 34.2%, to $15.7 million in the three months ended November 2, 2024, compared to $11.7 million in the same period last year[121]. - Automotive segment income from operations was $0.7 million in the three months ended November 2, 2024, compared to a loss of $61.5 million in the same period of 2023[118]. Taxation - Income tax expense was $3.2 million with a 200.0% effective tax rate for the three months ended November 2, 2024, compared to an income tax benefit of $0.2 million (0.4% effective tax rate) for the same period in 2023[112]. - The effective tax rate for the three months ended November 2, 2024, was higher than the U.S. federal statutory tax rate of 21% due to an increase in valuation allowance for U.S. deferred tax assets[112]. Cash Flow and Financing - Net cash used in operating activities was $37.1 million in the six months ended November 2, 2024, compared to $6.2 million in the same period last year[129]. - Capital expenditures were $24.0 million in the six months ended November 2, 2024, compared to $24.5 million in the same period last year[130]. - The company had net cash used in financing activities of $8.1 million in the six months ended November 2, 2024, compared to net cash provided of $1.9 million in the same period last year[131]. - As of November 2, 2024, the company had $97.0 million in cash and cash equivalents, with $49.8 million held in subsidiaries outside the U.S.[124]. Business Challenges - The company continues to face challenges from global supply chain disruptions, including potential increases in material and logistics costs[99]. - The adoption of electric vehicles (EVs) has been slower than anticipated, impacting the company's financial condition and results of operations[97]. - The company is exposed to market risks from foreign currency exchange, interest rates, and commodity prices, which could affect operating results, financial position, and cash flows[134]. - There has been no significant change in the company's exposure to market risk during the six months ended November 2, 2024[134]. Strategic Decisions - The company initiated the discontinuation of the Dabir business, which accounted for all of the Medical segment's financial results, and sold certain assets of this business[121]. - The Amended Credit Agreement provides for a secured multicurrency revolving credit facility of $500 million, with compliance maintained as of November 2, 2024[128]. - The company has no off-balance sheet arrangements as defined under SEC rules[133].