Methode Electronics, Inc. (NYSE:MEI) reported a first-quarter FY24 net sales growth of 2.6% year-on-year to $289.7 million, beating the consensus of $287.75 million.
Adjusted EPS of $0.06 missed the consensus of $0.23.
Methode was ailed by operational inefficiencies in its North American Auto operations in Q1 owing to labor and vendor issues. These issues led to planning deficiencies, inventory shortages, unrecoverable spot purchases, and delayed shipments. These operational challenges and some accelerated expenses related to program launches led to an earnings shortfall.
Segments: The Automotive segment’s net sales were $158.3 million, down from $176.6 million in the year-ago period. Net sales for the Industrial segment were $115.4 million, up from $92.1 million. Sales at the Interface segment were $15.2 million, up from $13.0 million. The medical segment’s net sales were $0.8 million, up from $0.7 million.
Gross profit fell 12.6% Y/Y to $54 million.
Adjusted EBITDA was $19.3 million, compared to $38.2 million in the same quarter of fiscal 2023.
The company exited the quarter with cash and equivalents totaling $147.9 million. Debt was $339.0 million at the end of the quarter.
Outlook: MEI expects Q2 net sales of $285 million-$295 million versus the $310.52 million estimate.
Q2 Adjusted EPS will be $0.12-$0.17 versus $0.49 estimate.
For FY24, the company sees net sales of $1.14 billion-$1.18 billion versus the $1.16 billion estimate (prior view: $1.15 billion-$1.20 billion).
For FY24, the Adjusted EPS is expected to be $0.88-$1.08 versus the $1.59 estimate (prior view: $1.55-$1.75).
For FY25, the company continues to see net sales of $1.25 billion-$1.35 billion versus the $1.25 billion estimate.
President and Chief Executive Officer Donald W. Duda said, “These operational challenges have been identified and corrective action plans are already in place. The residual effects will also impact our second quarter and, along with significant further weakening in the e-bike market, are the primary drivers to our lowering of earnings guidance for the full year. However, we remain on track with the 20-plus new program launches that we previously announced.”
Price Action: MEI shares are trading lower by 10% in the premarket to $27.00 on the last check Thursday.
