METHODE ELECTRONICS INC [MEI] Filings

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10-Q 1 mei-20230729.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended July 29, 2023


☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from ______ to ______

Commission file number 001-33731

METHODE ELECTRONICS, INC.

(Exact name of registrant as specified in its charter)


Delaware	36-2090085
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
8750 West Bryn Mawr Avenue, Suite 1000, Chicago, Illinois	60631-3518
(Address of principal executive offices)	(Zip Code)

(Registrant’s telephone number, including area code) (708) 867-6777

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.50 Par Value	MEI	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At September 5, 2023, the registrant had 36,009,532 shares of common stock outstanding.

Table of Contents

METHODE ELECTRONICS, INC.

INDEX


		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Statements of Income (unaudited) - Three Months Ended July 29, 2023 and July 30, 2022	2

	Condensed Consolidated Statements of Comprehensive Income (unaudited) - Three Months Ended July 29, 2023 and July 30, 2022	3

	Condensed Consolidated Balance Sheets as of July 29, 2023 (unaudited) and April 29, 2023	4

	Condensed Consolidated Statements of Shareholders’ Equity (unaudited) - Three Months Ended July 29, 2023 and July 30, 2022	5

	Condensed Consolidated Statements of Cash Flows (unaudited) - Three Months Ended July 29, 2023 and July 30, 2022	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 5.	Other Information	31

Item 6.	Exhibits	31

SIGNATURES		32

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in millions, except per share data)


	Three Months Ended
	July 29, 2023		July 30, 2022
Net sales	$	289.7	$	282.4

Cost of products sold		235.7		220.6

Gross profit		54.0		61.8

Selling and administrative expenses		44.5		35.3
Amortization of intangibles		5.7		4.7

Income from operations		3.8		21.8

Interest expense, net		2.8		—
Other income, net		—		(4.1	)

Pre-tax income		1.0		25.9

Income tax expense		0.1		4.4
Net income		0.9		21.5
Net income attributable to redeemable noncontrolling interest		—		—

Net income attributable to Methode	$	0.9	$	21.5

Basic and diluted income per share attributable to Methode:
Basic	$	0.03	$	0.59
Diluted	$	0.02	$	0.58

Cash dividends per share	$	0.14	$	0.14

See notes to condensed consolidated financial statements.

Table of Contents

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in millions)


	Three Months Ended
	July 29, 2023			July 30, 2022
Net income	$	0.9		$	21.5

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(2.5	)		(10.9	)
Derivative financial instruments		(1.6	)		1.5
Other comprehensive income (loss)		(4.1	)		(9.4	)
Comprehensive income (loss)		(3.2	)		12.1
Comprehensive income attributable to redeemable noncontrolling interest		—			—
Comprehensive income (loss) attributable to Methode	$	(3.2	)	$	12.1

See notes to condensed consolidated financial statements.

Table of Contents

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share and per-share data)


	July 29, 2023			April 29, 2023
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	147.9		$	157.0
Accounts receivable, net		300.8			314.3
Inventories		175.6			159.7
Income tax receivable		13.4			12.9
Prepaid expenses and other current assets		19.8			20.5
Total current assets		657.5			664.4
Long-term assets:
Property, plant and equipment, net		225.2			220.3
Goodwill		302.5			301.9
Other intangible assets, net		251.3			256.7
Operating lease right-of-use assets, net		29.5			28.4
Deferred tax assets		33.7			33.6
Pre-production costs		38.9			36.1
Other long-term assets		35.5			37.7
Total long-term assets		916.6			914.7
Total assets	$	1,574.1		$	1,579.1

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	131.9		$	138.7
Accrued employee liabilities		26.7			36.7
Other accrued liabilities		33.7			34.5
Short-term operating lease liabilities		6.9			6.8
Short-term debt		3.2			3.2
Income tax payable		6.0			8.1
Total current liabilities		208.4			228.0
Long-term liabilities:
Long-term debt		335.8			303.6
Long-term operating lease liabilities		22.4			21.8
Long-term income tax payable		16.7			16.7
Other long-term liabilities		17.1			14.3
Deferred tax liabilities		41.4			41.8
Total long-term liabilities		433.4			398.2
Total liabilities		641.8			626.2
Redeemable noncontrolling interest		0.9			11.1
Shareholders' equity:
Common stock, $0.50 par value, 100,000,000 shares authorized, 37,356,156 shares and 37,167,375 shares issued as of July 29, 2023 and April 29, 2023, respectively		18.7			18.6
Additional paid-in capital		182.5			181.0
Accumulated other comprehensive loss		(23.1	)		(19.0	)
Treasury stock, 1,346,624 shares as of July 29, 2023 and April 29, 2023		(11.5	)		(11.5	)
Retained earnings		764.8			772.7
Total shareholders' equity		931.4			941.8
Total liabilities, redeemable noncontrolling interest and shareholders' equity	$	1,574.1		$	1,579.1

See notes to condensed consolidated financial statements.

Table of Contents

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

(in millions, except share data)


	Three Months Ended July 29, 2023
	Redeemable noncontrolling interest			Common stock shares		Common stock		Additional paid-in capital			Accumulated other comprehensive income (loss)			Treasury stock			Retained earnings			Total shareholders' equity
Balance as of April 29, 2023	$	11.1			37,167,375	$	18.6	$	181.0		$	(19.0	)	$	(11.5	)	$	772.7		$	941.8
Issuance of restricted stock, net of tax withholding		—			188,781		0.1		(0.1	)		—			—			(3.8	)		(3.8	)
Purchase of redeemable noncontrolling interest		(10.2	)		—		—		—			—			—			—			—
Stock-based compensation expense		—			—		—		1.6			—			—			—			1.6
Other comprehensive loss		—			—		—		—			(4.1	)		—			—			(4.1	)
Net income		—			—		—		—			—			—			0.9			0.9
Dividends on common stock		—			—		—		—			—			—			(5.0	)		(5.0	)
Balance as of July 29, 2023	$	0.9			37,356,156	$	18.7	$	182.5		$	(23.1	)	$	(11.5	)	$	764.8		$	931.4


			Three Months Ended July 30, 2022
	Redeemable noncontrolling interest		Common stock shares			Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)			Treasury stock			Retained earnings			Total shareholders' equity
Balance as of April 30, 2022	$	—		38,276,968		$	19.2		$	169.0	$	(26.8	)	$	(11.5	)	$	763.9		$	913.8
Issuance of restricted stock, net of tax withholding		—		42,381			—			—		—			—			(0.4	)		(0.4	)
Purchases of common stock		—		(317,635	)		(0.2	)		—		—			—			(11.7	)		(11.9	)
Stock-based compensation expense		—		—			—			3.0		—			—			—			3.0
Other comprehensive loss		—		—			—			—		(9.4	)		—			—			(9.4	)
Net income		—		—			—			—		—			—			21.5			21.5
Dividends on common stock		—		—			—			—		—			—			(5.2	)		(5.2	)
Balance as of July 30, 2022	$	—		38,001,714		$	19.0		$	172.0	$	(36.2	)	$	(11.5	)	$	768.1		$	911.4

See notes to condensed consolidated financial statements.

Table of Contents

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)


	Three Months Ended
	July 29, 2023			July 30, 2022
Operating activities:
Net income	$	0.9		$	21.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14.0			12.3
Stock-based compensation expense		2.6			4.0
Change in cash surrender value of life insurance		0.6			0.2
Amortization of debt issuance costs		0.2			0.2
Impairment of long-lived assets		0.6			—
Change in deferred income taxes		(0.5	)		(1.8	)
Changes in operating assets and liabilities:
Accounts receivable		11.5			(11.9	)
Inventories		(16.5	)		(17.4	)
Prepaid expenses and other assets		(2.3	)		(4.3	)
Accounts payable		(5.7	)		10.5
Other liabilities		(11.0	)		(0.6	)
Net cash (used in) provided by operating activities		(5.6	)		12.7

Investing activities:
Purchases of property, plant and equipment		(13.8	)		(9.6	)
Net cash used in investing activities		(13.8	)		(9.6	)

Financing activities:
Taxes paid related to net share settlement of equity awards		(3.8	)		(0.5	)
Repayments of finance leases		(0.1	)		(0.1	)
Purchases of common stock		—			(11.9	)
Cash dividends		(5.3	)		(5.0	)
Purchase of redeemable noncontrolling interest		(10.2	)		—
Proceeds from borrowings		42.0			—
Repayments of borrowings		(10.1	)		(3.3	)
Net cash provided by (used in) financing activities		12.5			(20.8	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(2.2	)		(1.9	)
Decrease in cash and cash equivalents		(9.1	)		(19.6	)
Cash and cash equivalents at beginning of the period		157.0

METHODE ELECTRONICS INC [MEI] Filings
10-Q	[2023-09-07]
10-K	[2023-06-27]
10-Q	[2023-03-09]
10-Q	[2022-12-01]
10-Q	[2022-09-01]
10-K	[2022-06-23]
10-Q	[2022-03-03]
10-Q	[2021-12-02]
10-Q	[2021-09-02]
10-K	[2021-06-24]
10-Q	[2021-03-04]
10-Q	[2020-12-03]
10-Q	[2020-09-03]
10-K	[2020-06-30]
10-Q	[2020-03-05]
10-Q	[2019-12-05]
10-Q	[2019-08-29]
10-K	[2019-06-20]
10-Q	[2019-03-07]
10-Q	[2018-12-06]
10-Q	[2018-08-30]
10-K	[2018-06-21]
10-Q	[2018-03-01]
10-Q	[2017-12-07]
10-Q	[2017-08-31]
10-K	[2017-06-22]
10-Q	[2017-03-02]
10-Q	[2016-12-08]
10-Q	[2016-09-01]
10-K	[2016-06-23]
10-Q	[2016-03-03]
10-Q	[2015-12-10]
10-Q	[2015-09-03]
10-K	[2015-06-25]
10-Q	[2015-03-05]
10-Q	[2014-12-11]
10-Q	[2014-09-04]
10-K	[2014-06-26]
10-Q	[2014-03-13]
10-Q	[2013-12-05]
10-Q	[2013-08-29]
10-K	[2013-06-20]
10-Q	[2013-02-28]
10-Q	[2012-12-06]
10-Q	[2012-08-30]
10-K	[2012-06-28]
10-Q	[2012-03-01]