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Methode Electronics (MEI) Q1 Earnings Beat, Sales Fall Y/Y
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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.
Methode Electronics, Inc. Price, Consensus and EPS Surprise
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:
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Methode Electronics (MEI) Q1 Earnings Beat, Sales Fall Y/Y
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.
Methode Electronics, Inc. Price, Consensus and EPS Surprise
Methode Electronics, Inc. price-consensus-eps-surprise-chart | Methode Electronics, Inc. Quote
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%.