Methode Electronics (MEI - Free Report) reported first-quarter fiscal 2023 earnings of 58 cents per share, which beat the Zacks Consensus Estimate by 20.83% but declined 23.7% from the year-ago fiscal quarter’s reading.
Net sales dipped 1.9% from the year-ago fiscal quarter’s level to $282.4 million. The figure beat the Zacks Consensus Estimate by 2.69%.
The top-line decline from the year-earlier fiscal quarter’s figure was primarily attributed to lower sales volumes in the Automotive segment, mostly due to demand weakness in Asia and Europe. Supply-chain constraints hurt sales in North America, while weaker activity in Europe was due to the conflict in Ukraine. Also, foreign currency transcation losses impacted sales negatively by $14 million.
Quarterly Details
Automotive net sales decreased 9.8% from the year-ago fiscal quarter’s number to $176.6 million.
Industrial net sales increased 17.3% from the prior-year fiscal quarter’s level to $92.1 million. The increase was primarily due to higher sales in commercial vehicle lighting and industrial non-EV power-related product offerings.
Interface net sales increased 2.4% from the year-ago fiscal quarter’s figure to $13 million. Medical net sales increased $0.9 million from the year-earlier fiscal quarter’s tally to $1.6 million.
Gross margin contracted 300 basis points (bps) from the year-ago fiscal quarter’s level to 21.9%.
Adjusted EBITDA contracted 330 bps from the year-ago fiscal quarter’s reading to 13.7%.
Operating expenses increased 6.4% from the last fiscal year’s quarterly figure to $40 million. Selling, general and administrative (SG&A) expenses increased 7.6% from the year-ago fiscal quarter’s level to $35.3 million.
As a percentage of revenues, operating expenses increased 110 bps from the year ago period at 14.2%. SG&A also increased 110 bps from the corresponding year-ago fiscal quarter’s levels at 12.5%, respectively.
Operating income declined 36.1% from the year-ago fiscal quarter’s level to $21.8 million. The decrease from the prior-year fiscal quarter’s number was primarily due to lower sales, and higher material and freight costs due to supply-chain issues and product mix.
Operating margin contracted 410 bps to 7.7%.
Balance Sheet & Cash Flow
As of July 30, 2022, cash and cash equivalents were $152.4 million compared with $172 million as of Apr 30, 2022.
Debt was $207.2 million at the end of the fiscal first quarter compared with $210.5 million in the previous fiscal quarter. Net debt, defined as debtless cash and cash equivalents, was $54.8 million.
Moreover, free cash flow was $3.1 million.
Guidance
For fiscal 2023, Methode Electronics expects sales between $1.16 billion and $1.21 billion. Earnings are expected in the range of $2.70-$3.10 per share.
Zacks Rank & Stocks to Consider
Methode Electronics currently carries a Zacks Rank #3 (Hold).
The stock has outperformed the broader Zacks Computer & Technology sector on a year-to-date basis. While Methode Electronics’ shares have lost 20% year to date, the sector has fallen 20.8%.
Here are some better-ranked stocks in the broader Computer and Technology sector:
ASE Technology (ASX - Free Report) carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ASX’s shares have slumped 22.4% in the year-to-date period compared with the Zacks Electronics - Semiconductors industry’s decline of 21.8%.
Monolithic Power Systems (MPWR - Free Report) carries a Zacks Rank of 2, currently.
MPWR’s shares have risen 13.5% in the year-to-date period against the Zacks Semiconductor - Analog and Mixedindustry’s decline of 20.8%.
Arista Networks (ANET - Free Report) presently sports a Zacks Rank #1.
ANET’s shares have dropped 39% in the year-to-date period compared with the Zacks Communication - Components industry’s decline of 24.9%.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
Methode Electronics (MEI - Free Report) reported first-quarter fiscal 2023 earnings of 58 cents per share, which beat the Zacks Consensus Estimate by 20.83% but declined 23.7% from the year-ago fiscal quarter’s reading.
Net sales dipped 1.9% from the year-ago fiscal quarter’s level to $282.4 million. The figure beat the Zacks Consensus Estimate by 2.69%.
The top-line decline from the year-earlier fiscal quarter’s figure was primarily attributed to lower sales volumes in the Automotive segment, mostly due to demand weakness in Asia and Europe. Supply-chain constraints hurt sales in North America, while weaker activity in Europe was due to the conflict in Ukraine. Also, foreign currency transcation losses impacted sales negatively by $14 million.
Quarterly Details
Automotive net sales decreased 9.8% from the year-ago fiscal quarter’s number to $176.6 million.
Industrial net sales increased 17.3% from the prior-year fiscal quarter’s level to $92.1 million. The increase was primarily due to higher sales in commercial vehicle lighting and industrial non-EV power-related product offerings.
Interface net sales increased 2.4% from the year-ago fiscal quarter’s figure to $13 million. Medical net sales increased $0.9 million from the year-earlier fiscal quarter’s tally to $1.6 million.
Gross margin contracted 300 basis points (bps) from the year-ago fiscal quarter’s level to 21.9%.
Adjusted EBITDA contracted 330 bps from the year-ago fiscal quarter’s reading to 13.7%.
Operating expenses increased 6.4% from the last fiscal year’s quarterly figure to $40 million. Selling, general and administrative (SG&A) expenses increased 7.6% from the year-ago fiscal quarter’s level to $35.3 million.
As a percentage of revenues, operating expenses increased 110 bps from the year ago period at 14.2%. SG&A also increased 110 bps from the corresponding year-ago fiscal quarter’s levels at 12.5%, respectively.
Operating income declined 36.1% from the year-ago fiscal quarter’s level to $21.8 million. The decrease from the prior-year fiscal quarter’s number was primarily due to lower sales, and higher material and freight costs due to supply-chain issues and product mix.
Operating margin contracted 410 bps to 7.7%.
Balance Sheet & Cash Flow
As of July 30, 2022, cash and cash equivalents were $152.4 million compared with $172 million as of Apr 30, 2022.
Debt was $207.2 million at the end of the fiscal first quarter compared with $210.5 million in the previous fiscal quarter. Net debt, defined as debtless cash and cash equivalents, was $54.8 million.
Moreover, free cash flow was $3.1 million.
Guidance
For fiscal 2023, Methode Electronics expects sales between $1.16 billion and $1.21 billion. Earnings are expected in the range of $2.70-$3.10 per share.
Zacks Rank & Stocks to Consider
Methode Electronics currently carries a Zacks Rank #3 (Hold).
The stock has outperformed the broader Zacks Computer & Technology sector on a year-to-date basis. While Methode Electronics’ shares have lost 20% year to date, the sector has fallen 20.8%.
Here are some better-ranked stocks in the broader Computer and Technology sector:
ASE Technology (ASX - Free Report) carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ASX’s shares have slumped 22.4% in the year-to-date period compared with the Zacks Electronics - Semiconductors industry’s decline of 21.8%.
Monolithic Power Systems (MPWR - Free Report) carries a Zacks Rank of 2, currently.
MPWR’s shares have risen 13.5% in the year-to-date period against the Zacks Semiconductor - Analog and Mixedindustry’s decline of 20.8%.
Arista Networks (ANET - Free Report) presently sports a Zacks Rank #1.
ANET’s shares have dropped 39% in the year-to-date period compared with the Zacks Communication - Components industry’s decline of 24.9%.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
Get the latest research report on MPWR - FREE
Get the latest research report on MEI - FREE
Get the latest research report on ASX - FREE
Get the latest research report on ANET - FREE