Methode Electronics(US:MEI)2025-03-05 21:30Financial Performance - Net sales decreased by $19.6 million, or 7.6%, to $239.9 million in the three months ended February 1, 2025, compared to $259.5 million in the same period last year [129]. - Net sales for the nine months ended February 1, 2025, decreased by $46.2 million, or 5.5%, to $791.0 million compared to $837.2 million in the prior year [130]. - Net sales in the Automotive segment decreased by $24.0 million, or 17.2%, to $115.7 million in the three months ended February 1, 2025, compared to $139.7 million in the same period last year [145]. - Net loss was $14.4 million in the three months ended February 1, 2025, compared to $11.6 million in the same period last year [143]. - Income tax expense was $6.2 million with a -75.6% effective tax rate in the three months ended February 1, 2025, compared to $1.1 million with a -10.5% effective tax rate in the same period last year [141]. Cost and Expenses - Cost of products sold decreased by $23.9 million, or 10.7%, to $198.6 million in the three months ended February 1, 2025, representing 82.8% of net sales [131]. - Selling and administrative expenses increased by $3.8 million, or 11.2%, to $37.7 million in the three months ended February 1, 2025, representing 15.7% of net sales [134]. - Interest expense, net increased to $5.5 million in the three months ended February 1, 2025, compared to $5.0 million in the same period last year [138]. Profitability - Gross profit margin increased to 17.2% of net sales in the three months ended February 1, 2025, compared to 14.3% in the same period last year [133]. - Gross profit in the Automotive segment decreased by $1.5 million, or 33.3%, to $3.0 million in the three months ended February 1, 2025, with gross profit margins decreasing to 2.6% [149]. - Industrial segment gross profit increased by $4.9 million, or 16.2%, to $35.2 million in the three months ended February 1, 2025, with gross profit margins increasing to 31.5% [156]. - Interface segment gross profit increased by $0.7 million, or 31.8%, to $2.9 million in the three months ended February 1, 2025, with gross profit margins increasing to 23.6% [163]. - Interface segment gross profit increased by $3.0 million, or 39.0%, to $10.7 million for the nine months ended February 1, 2025, compared to $7.7 million for the same period in 2024 [164]. - Gross profit margins improved to 26.6% in the nine months ended February 1, 2025, up from 19.4% in the nine months ended January 27, 2024 [164]. Segment Performance - Automotive segment loss from operations improved to $9.0 million in the three months ended February 1, 2025, compared to $11.0 million in the same period last year [151]. - Industrial segment net sales increased by $4.8 million, or 4.5%, to $111.9 million in the three months ended February 1, 2025, compared to $107.1 million in the same period last year [154]. - Interface segment net sales decreased by $0.4 million, or 3.1%, to $12.3 million in the three months ended February 1, 2025, compared to $12.7 million in the same period last year [161]. - Income from operations for the Interface segment rose by $3.4 million, or 63.0%, to $8.8 million for the nine months ended February 1, 2025, compared to $5.4 million for the same period in 2024 [165]. Cash Flow and Financial Position - As of February 1, 2025, the company had $103.8 million in cash and cash equivalents, with $71.4 million held in subsidiaries outside the U.S. [170]. - Net cash used in operating activities was $9.0 million for the nine months ended February 1, 2025, a decrease from net cash provided of $22.6 million for the same period in 2024 [177]. - Net cash used in investing activities was $26.7 million for the nine months ended February 1, 2025, compared to $39.0 million for the same period in 2024 [178]. - The company paid cash dividends of $15.3 million in the nine months ended February 1, 2025, compared to $15.0 million in the same period in 2024 [179]. - The outstanding balance under the revolving credit facility was $285.0 million in euro-denominated borrowings and $45.0 million in U.S. denominated borrowings as of February 1, 2025 [174]. - The company anticipates compliance with financial covenants in the Amended Credit Agreement, but future compliance is uncertain due to various risk factors [175]. Challenges and Strategic Decisions - The company continues to face challenges from global supply chain disruptions, including increased material and logistics costs [126]. - The adoption of electric vehicles (EVs) has been slower than anticipated, impacting the company's financial condition and results of operations [124]. - The company is monitoring the implications of new tariffs, including 25% tariffs on products from Canada and Mexico, which could affect margins and customer demand [121]. - The company has initiated the discontinuation of the Dabir business, which accounted for all of the Medical segment's financial results [167]. - The company recognized a goodwill impairment of $56.5 million in the Automotive segment in the nine months ended January 27, 2024 [136].