Forms Industrial
SegmentIncludes Six Weeks of Grakon
Acquisition
Methode Electronics, Inc. (NYSE: MEI), a global
developer of custom-engineered and application-specific products
and solutions, announced financial results for the second quarter
of Fiscal 2019 ended October 27, 2018.
Second Quarter Fiscal 2019Methode's
second-quarter Fiscal 2019 net sales increased $33.9 million, or
14.7 percent, to $264.0 million from $230.1 million in the same
quarter of Fiscal 2018. Year over year, currency rate fluctuations
increased net sales $1.6 million.
GAAP net income decreased $9.6 million to $14.6 million, or
$0.39 per share, in the second quarter of Fiscal 2019 from income
of $24.2 million, or $0.64 per share, in the same period of Fiscal
2018.
Adjusted net income, a non-GAAP financial measure, was $28.4
million, or $0.75 per share, in the second quarter of Fiscal 2019
compared to $27.7 million, or $0.74 per share, in the same period
of Fiscal 2018. Adjusted net income for all periods excludes
acquisition-related expenses, including purchase accounting
adjustments for the Fiscal 2019 periods, and stock award
amortization expense due to the revised Fiscal 2020 EBITDA estimate
of the long-term incentive program.
Year over year, Fiscal 2019 second-quarter GAAP net income was
negatively affected by:
- increased acquisition-related costs ($3.5 million) and
increased purchase accounting adjustments ($3.2 million) totaling
$6.7 million;
- higher stock award amortization expense due to the revised
Fiscal 2020 EBITDA estimate of the long-term incentive program of
$5.7 million;
- higher interest expense of $1.8 million;
- increased intangible asset amortization expense related to the
Pacific Insight and Grakon acquisitions of $2.6 million; and
- customer pricing reductions.
Year over year, Fiscal 2019 second-quarter GAAP net income
benefitted from:
- higher sales in the Automotive and Industrial segments
(inclusive of Pacific Insight and Grakon);
- decreased income tax expense of $1.9 million;
- lower legal fees of $1.1 million; and
- the favorable impact of the weakening Mexican peso compared to
the U.S. dollar.
Consolidated gross margins as a percentage of net sales were
virtually unchanged at 26.8 percent in the Fiscal 2019 second
quarter from 26.9 percent in the Fiscal 2018 period. Year over
year, gross margins were negatively impacted by an unfavorable
sales mix in the Automotive and Interface segments, the purchase
accounting adjustment related to Grakon inventory and customer
pricing reductions. Gross margins were positively impacted by a
favorable sales mix in the Industrial segment and the favorable
currency impact. Adjusted gross margins as a percentage of sales, a
non-GAAP financial measure, increased to 27.8 percent in the Fiscal
2019 second quarter from 27.3 percent in the same period of Fiscal
2018 and exclude purchase accounting adjustments related to
inventory and severance in the applicable periods.
Selling and administrative expenses as a percentage of sales
increased to 18.2 percent for the Fiscal 2019 second quarter
compared to 13.6 percent in the same period last year due primarily
to higher stock award amortization expense, increased
acquisition-related costs, purchase accounting adjustments related
to Grakon severance, as well as selling and administrative expenses
attributable to the Pacific Insight and Grakon acquisitions,
partially offset by lower legal fees. Adjusted selling and
administrative expenses as a percentage of sales, a non-GAAP
financial measure, were 12.9 percent in the Fiscal 2019 second
quarter compared to 12.1 percent in the prior-year second quarter
and exclude acquisition-related expenses, including purchase
accounting adjustments, and stock award amortization expense due to
the revised Fiscal 2020 EBITDA estimate of the long-term incentive
program in the applicable periods.
Year over year, intangible asset amortization expense in the
second quarter of Fiscal 2019 increased $2.6 million, or 236.4
percent, to $3.7 million, due to amortization expense related to
the Pacific Insight and Grakon acquisitions.
In the Fiscal 2019 second quarter, income tax expense decreased
$1.9 million to $3.0 million compared to $4.9 million in the Fiscal
2018 second quarter primarily due to lower pre-tax income in the
Fiscal 2019 period. The Company’s effective tax rate increased to
17.0 percent in the Fiscal 2019 period from 16.8 percent in the
previous second quarter.
Segment Comparisons (GAAP Reported)Effective in
the Fiscal 2019 second quarter, the Company reorganized its
segments to be Automotive, Industrial, Interface and Medical to
align to its new structure resulting from the acquisition of
Grakon. Historical information has been revised to reflect
the new segments. A summary of the significant segment changes is
as follows:
- Grakon's automotive business has been included in the
Automotive segment, while Grakon's non-automotive business has been
included in the Industrial segment.
- The busbar business, previously included in the Power Products
segment, is now part of the Industrial segment, and the Power
Products segment has been eliminated.
- The radio-remote control business, previously included in the
Interface segment, is now part of the Industrial segment.
- The medical devices business, previously included in the Other
segment, now makes up the Medical segment. The Other segment has
been eliminated.
Comparing the Automotive segment's Fiscal 2019 second quarter to
the same period of Fiscal 2018,
- Net sales improved 8.0 percent, or $14.9 million, attributable
to:-- a 23.1 percent sales increase in North America as the
result of higher sales from Pacific Insight of $17.5 million, sales
from Grakon of $6.1 million and higher center console and user
interface product volume, partially offset by pricing reductions
and a combination of decreased volume and pricing reductions of
transmission lead-frame assembly products; partially offset
by-- a 12.5 percent sales decrease in Europe mainly due to the
exclusion of pre-production tooling sales as a result of newly
adopted accounting guidelines regarding revenue recognition under
FASB ASC 606, partially offset by higher sensor product volumes;
and-- a 7.4 percent sales decline in Asia attributable to a
combination of lower volume and pricing reductions of transmission
lead-frame assembly product, as well as decreased steering angle
sensor product volume, as the product approaches end of
production.
- Gross margins as a percentage of sales decreased to 27.2
percent from 28.3 percent due to an unfavorable sales mix and
pricing reductions, partially offset by a favorable currency
impact.
- Income from operations decreased $6.1 million, or 14.2 percent,
resulting from higher stock award amortization expense, pricing
reductions and increased intangible asset amortization expense,
partially offset by higher sales and a favorable currency
impact.
Comparing the Industrial segment's Fiscal 2019 second quarter to
the same period of Fiscal 2018,
- Net sales increased 91.9 percent, or $22.7 million,
attributable to:-- a 204.4 percent sales improvement in North
America as the result of sales from Grakon of $18.1 million and
higher busbar product volume;-- a 54.2 percent sales increase
in Asia due to improved busbar product volume; and-- an 11.2
percent sales improvement in Europe attributable to increased radio
remote control product volume, partially offset by lower bypass
switch product volume.
- Gross margins as a percentage of sales increased to 30.0
percent from 25.9 percent due to a favorable sales mix partially
offset by purchase accounting adjustments.
- Income from operations improved to $5.1 million compared to
$2.7 million resulting from increased sales and lower legal
fees.
Comparing the Interface segment's Fiscal 2019 second quarter to
the same period of Fiscal 2018,
- Net sales decreased 21.4 percent, or $4.0 million, attributable
to:-- a 21.7 percent sales decline in North America as the
result of lower appliance and data solution product volumes;
while-- sales in Asia were unchanged.
- Gross margins as a percentage of sales decreased to 10.2
percent from 20.3 percent, primarily due to significantly lower
sales, an unfavorable sales mix and costs associated with a
directed supplier issue on an appliance program.
- Income from operations declined $2.7 million, or 128.6 percent,
resulting from lower sales, partially offset by a favorable
currency impact.
Comparing the Medical segment's Fiscal 2019 second quarter to
the same period of Fiscal 2018,
- Net sales increased $0.3 million.
First Half Fiscal 2019Methode's first-half
Fiscal 2019 net sales increased $56.1 million, or 13.0%, to $487.4
million from $431.3 million in the same period of Fiscal 2018. Year
over year, currency rate fluctuations increased net sales by $1.1
million.
GAAP net income decreased $6.4 million to $38.3 million, or
$1.02 per share, in the first-half of Fiscal 2019 from $44.7
million, or $1.19 per share, in the same period of Fiscal 2018.
Adjusted net income, a non-GAAP financial measure, increased to
$51.1 million, or $1.36 per share, in the first half of Fiscal 2019
compared to $50.4 million, or $1.34 per share, in the same period
of Fiscal 2018. Adjusted net income for all periods excludes
acquisition-related expenses, including purchase accounting
adjustments for the Fiscal 2019 periods, and stock award
amortization expense due to the revised Fiscal 2020 EBITDA estimate
of the long-term incentive program.
Year over year, first-half Fiscal 2019 GAAP net income was
negatively affected by:
- increased acquisition-related costs ($1.5 million) and
increased purchase accounting adjustments ($3.2 million) totaling
$4.7 million;
- increased intangible asset amortization expense related to the
Pacific Insight, Procoplast and Grakon acquisitions of $3.9
million;
- higher stock award amortization expense due to the revised
Fiscal 2020 EBITDA estimate of the long-term incentive program of
$3.7 million;
- higher interest expense of $1.8 million;
- higher compensation expense of $1.5 million; and
- customer pricing reductions.
Year over year, first-half Fiscal 2019 GAAP net income
benefitted from:
- higher sales in the Automotive and Industrial segments
(inclusive of Pacific Insight, Procoplast and Grakon);
- lower legal fees of $2.8 million;
- lower income tax expense of $1.7 million; and
- a favorable currency impact.
Consolidated gross margins as a percentage of sales decreased to
26.9 percent in the first-half of Fiscal 2019 from 27.3 percent in
the first-half of Fiscal 2018. Gross margins declined primarily as
a result of an unfavorable sales mix in the Automotive and
Interface segments, the purchase accounting adjustment related to
Grakon inventory and customer pricing reductions, partially offset
by a favorable sales mix in the Industrial segment and a favorable
currency impact. Adjusted gross margins as a percentage of sales, a
non-GAAP financial measure, were stable at 27.4 percent in the
Fiscal 2019 first half compared to 27.5 percent in the Fiscal 2018
period.
Selling and administrative expenses as a percentage of sales
increased to 15.9 percent for the first-half of Fiscal 2019
compared to 14.1 percent in the first-half of Fiscal 2018 due
primarily to higher stock award amortization expense due to the
revised Fiscal 2020 EBITDA estimate related to the long-term
incentive program, increased acquisition-related costs, purchase
accounting adjustments related to Grakon severance, as well as
selling and administrative expenses attributable to the Pacific
Insight, Procoplast and Grakon acquisitions and higher compensation
and related costs, partially offset by lower legal fees. Adjusted
selling and administrative expenses as a percentage of sales, a
non-GAAP financial measure, were 13.3 percent in the Fiscal 2019
first half compared to 12.7 percent in the prior-year first
half.
Year over year, intangible asset amortization expense in the
first-half of Fiscal 2019 increased $3.9 million, or 229.4 percent,
to $5.6 million, due to the Pacific Insight, Procoplast and Grakon
acquisitions.
In the first-half of Fiscal 2019, income tax expense decreased
$1.7 million to $7.5 million compared to $9.2 million in the
first-half of Fiscal 2018 primarily due to lower pretax income and
higher investment tax credits. The Company’s effective tax rate
decreased to 16.4 percent in the first-half of Fiscal 2019 from
17.1 percent in the first-half of Fiscal 2018.
Segment Comparisons (GAAP Reported)Comparing
the Automotive segment's Fiscal 2019 first half to the same period
of Fiscal 2018,
- Net sales increased 9.8 percent, or $33.7 million, attributable
to:-- a 17.9 percent sales improvement in North America due to
higher sales from Pacific Insight of $38.8 million, sales from
Grakon of $6.1 million and higher user-interface product volume,
partially offset by center console pricing reductions and decreased
transmission lead-frame assembly volume and pricing reductions;
and-- a 3.6 percent sales increase in Europe due to higher
sales from Procoplast of $7.9 million, partially offset by the
exclusion of pre-production tooling sales; partially offset
by-- a 10.5 percent sales decrease in Asia due to a
combination of lower volume and pricing reductions of transmission
lead-frame assembly product, as well as lower steering angle sensor
product volume, as the product approaches end of production.
- Gross margins as a percentage of sales declined to 27.0 percent
from 28.8 percent due to unfavorable sales mix and pricing
reductions, partially offset by a favorable currency impact.
- Income from operations decreased $9.0 million, or 11.4 percent,
resulting from pricing reductions, higher intangible asset
amortization and stock award amortization expenses, partially
offset by higher sales and a favorable currency impact.
Comparing the Industrial segment's Fiscal 2019 first half to the
same period of Fiscal 2018,
- Net sales increased 57.6 percent, or $29.1 million,
attributable to:-- an 111.2 percent sales improvement in North
America as the result of sales from Grakon of $18.1 million and
higher radio remote control and busbar products volume;-- a
53.0 percent sales increase in Asia due to higher busbar product
volume; and-- a 10.4 percent sales improvement in Europe
attributable to higher radio remote control product volume,
partially offset by lower bypass switch product volume.
- Gross margins as a percentage of sales improved to 30.9 percent
from 25.9 percent due to a favorable sales mix partially offset by
purchase accounting adjustments.
- Income from operations increased to $12.2 million from $5.1
million due to improved sales and lower legal expenses.
Comparing the Interface segment's Fiscal 2019 first half to the
same period of Fiscal 2018,
- Net sales decreased 19.2 percent, or $7.2 million, attributable
to:-- a 27.3 percent sales decline in Asia due to lower legacy
product volume; and-- a 19.2 percent sales decrease in North
America as the result of lower appliance and data solution product
volumes.
- Gross margins as a percentage of sales declined to 14.5 percent
from 20.5 percent due to lower sales volumes, an unfavorable sales
mix and costs associated with a directed supplier issue on an
appliance program, partially offset by a favorable currency
impact.
- Income from operations decreased $3.2 million, or 94.1 percent,
as the result of lower sales and an unfavorable sales mix partially
offset by a favorable currency impact.
Comparing the Medical segment's Fiscal 2019 first half to the
same period of Fiscal 2018,
- Net sales increased $0.5 million due primarily to an expanded
customer base.
Fiscal 2019 GuidanceMethode updated Fiscal 2019
guidance to include the acquisition of Grakon to sales in the range
of $1 billion to $1.04 billion, pre-tax income in the range of
$91.5 million to $105.5 million and earnings per share in the range
of $2.02 to $2.33 from sales in the range of $950 million to $970
million, pre-tax income in the range of $127 million to $134
million and earnings per share in the range of $2.81 to $2.96.
Fiscal 2019 guidance considers:
- Lower consolidated revenues of approximately $61 million
(approximately $51 million in Automotive) from guidance issued in
Fiscal 2019 first quarter;
- Pre-tax expense for initiatives to reduce overall costs and
improve operational profitability in Fiscal 2019 of $7.3
million;
- Stock award amortization expense due to change in Fiscal 2020
EBITDA estimate from Threshold to Target of $5.7 million;
- Acquisition-related costs of $7.9 million;
- Purchase accounting adjustments for inventory and severance
related to the acquisition of Grakon of $7.0 million;
- The potential impact of proposed tariffs on imported Chinese
goods at 10 percent of $5.5 million; and
- International government grant of $5.9 million.
The guidance ranges for Fiscal 2019 are based upon management's
expectations regarding a variety of factors and involve a number of
risks and uncertainties, including, but not limited to, the
following:
- sales volumes and timing thereof for certain makes and models
of pickup trucks, sports utility vehicles and passenger cars;
- the potential impact of the current and proposed Chinese
tariffs and the costs associated with mitigating those
tariffs;
- the successful integration of acquisitions;
- the price of commodities, particularly copper and resins;
- sales mix within the markets served;
- currency exchange effect of the operations of foreign
businesses;
- supplier issues or manufacturing quality events;
- any unusual or one-time items; and
- an effective tax rate in the 16 to 18 percent range and no
significant changes in tax credit movement, valuation allowances or
enacted tax laws.
Management CommentsPresident and Chief
Executive Officer Donald W. Duda said, “In the last 18 months,
Methode completed three acquisitions with combined annual revenue
of approximately $350 million, fostering a meaningful Industrial
segment and diversifying our revenues into new end markets. Today,
the complementary products, technology and manufacturing
capabilities across all Methode's segments will bring additional
innovation and unique custom solutions, which should drive higher
margins for our shareholders.
"Our strong cash flow generation has allowed us to invest in
technologies, businesses and end markets, such as Dabir,
magneto-elastic torque sensing, LED lighting, EV power distribution
and now Grakon, which provide Methode the ability to continue to
grow and increase long-term value despite the anticipated headwinds
occurring in the Automotive market."
Non-GAAP Financial MeasuresTo supplement the
Company's financial statements presented in accordance with
generally accepted accounting principles in the United States
(“GAAP”), Methode uses Adjusted Net Income, Adjusted Earnings Per
Share, Adjusted Gross Margins As a Percentage of Sales and Selling
and Administrative Expenses as a Percentage of Sales as non-GAAP
measures. Reconciliation to the nearest GAAP measures of all
non-GAAP measures included in this press release can be found at
the end of this release. Methode's definitions of these non-GAAP
measures may differ from similarly titled measures used by others.
These non-GAAP measures should be considered supplemental to, and
not a substitute for, financial information prepared in accordance
with GAAP. The Company believes that these non-GAAP measures are
useful because they (i) provide both management and investors
meaningful supplemental information regarding financial performance
by excluding certain expenses that may not be indicative of
recurring core business operating results, (ii) permit investors to
view Methode's performance using the same tools that management
uses to evaluate its past performance, reportable business segments
and prospects for future performance and (iii) otherwise provide
supplemental information that may be useful to investors in
evaluating Methode.
Conference CallThe Company will conduct a
conference call and Webcast to review financial and operational
highlights led by its President and Chief Executive Officer, Donald
W. Duda, and Chief Financial Officer, Ron Tsoumas, today at 10:00
a.m. Central time.
To participate in the conference call, please dial (877)
407-9210 (domestic) or (201) 689-8049 (international) at least five
minutes prior to the start of the event. A simultaneous Webcast can
be accessed through the Company’s Web site, www.methode.com, by
selecting the Investor Relations page, and then clicking on the
“Webcast” icon.
A replay of the conference call will be available shortly after
the call through January 6, 2019, by dialing (877) 481-4010 and
providing Conference ID number 37159. On the Internet, a replay
will be available for 30 days through the Company’s Web site,
www.methode.com, by selecting the Investor Relations page and then
clicking on the “Webcast” icon.
About Methode Electronics, Inc.Methode
Electronics, Inc. (NYSE: MEI) is a global developer of custom
engineered and application specific products and solutions with
manufacturing, design and testing facilities in Belgium, Canada,
China, Egypt, Germany, India, Italy, Lebanon, Malta, Mexico, the
Netherlands, Singapore, Switzerland, the United Kingdom and the
United States. We design, manufacture and market devices employing
electrical, electronic, wireless, safety radio remote control,
sensing and optical technologies to control and convey signals
through sensors, interconnections and controls. Our business is
managed on a segment basis, with those segments being Automotive,
Industrial, Medical and Interface. Our components are in the
primary end markets of the automobile, commercial vehicle,
computer, information processing and networking equipment, voice
and data communication systems, consumer electronics, appliances,
aerospace vehicles and industrial equipment industries. Further
information can be found on Methode's Web site www.methode.com.
Forward-Looking StatementsThis press release
contains certain forward-looking statements, which reflect
management's expectations regarding future events and operating
performance and speak only as of the date hereof. These
forward-looking statements are subject to the safe harbor
protection provided under the securities laws. Methode undertakes
no duty to update any forward-looking statement to conform the
statement to actual results or changes in Methode's expectations on
a quarterly basis or otherwise. The forward-looking statements in
this press release involve a number of risks and uncertainties. The
factors that could cause actual results to differ materially from
our expectations are detailed in Methode's filings with the
Securities and Exchange Commission, such as our annual and
quarterly reports. Such factors may include, without limitation,
the following: (1) dependence on a small number of large customers,
including two large automotive customers; (2) dependence on the
automotive, appliance, commercial vehicle, computer and
communications industries; (3) international trade disputes
resulting in tariffs: (4) investment in programs prior to the
recognition of revenue; (5) timing, quality and cost of new program
launches; (6) changes in U.S. trade policy; (7) ability to
withstand price pressure, including pricing reductions; (8) ability
to successfully market and sell Dabir Surfaces; (9) currency
fluctuations; (10) customary risks related to conducting
global operations; (11) recognition of goodwill impairment charges;
(12) dependence on the availability and price of raw materials;
(13) fluctuations in our gross margins; (14) ability to withstand
business interruptions; (15) successfully benefit from acquisitions
and divestitures; (16) dependence on our supply chain; (17) income
tax rate fluctuations; (18) ability to keep pace with rapid
technological changes; (19) breach of our information technology
systems; (20) ability to avoid design or manufacturing defects;
(21) ability to compete effectively; (22) ability to protect our
intellectual property; (23) success of Pacific Insight and
Procoplast and/or our ability to implement and profit from new
applications of the acquired technology; (24) significant
adjustments to expense based on the probability of meeting certain
performance levels in our long-term incentive plan; and (25) costs
and expenses due to regulations regarding conflict minerals.
For Methode Electronics, Inc.Kristine
WalczakVice President - Corporate
Communications708-457-4030kwalczak@methode.com
Steve CarrDresner Corporate
Services312-780-7211scarr@dresnerco.com
METHODE ELECTRONICS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
INCOME (Unaudited)($ in millions, except per share
data)
|
Three Months Ended |
|
Six Months Ended |
|
October 27, 2018 |
|
October 28, 2017 |
|
October 27, 2018 |
|
October 28, 2017 |
Net Sales |
$ |
264.0 |
|
|
$ |
230.1 |
|
|
$ |
487.4 |
|
|
$ |
431.3 |
|
|
|
|
|
|
|
|
|
Cost of Products
Sold |
193.2 |
|
|
168.1 |
|
|
356.5 |
|
|
313.7 |
|
|
|
|
|
|
|
|
|
Gross Profit |
70.8 |
|
|
62.0 |
|
|
130.9 |
|
|
117.6 |
|
|
|
|
|
|
|
|
|
Selling and
Administrative Expenses |
48.0 |
|
|
31.2 |
|
|
77.5 |
|
|
60.8 |
|
Amortization of
Intangibles |
3.7 |
|
|
1.1 |
|
|
5.6 |
|
|
1.7 |
|
|
|
|
|
|
|
|
|
Income from
Operations |
19.1 |
|
|
29.7 |
|
|
47.8 |
|
|
55.1 |
|
|
|
|
|
|
|
|
|
Interest Expense
(Income), Net |
1.6 |
|
|
0.2 |
|
|
1.8 |
|
|
— |
|
Other Income, Net |
(0.1 |
) |
|
0.4 |
|
|
0.2 |
|
|
1.2 |
|
|
|
|
|
|
|
|
|
Income before Income
Taxes |
17.6 |
|
|
29.1 |
|
|
45.8 |
|
|
53.9 |
|
|
|
|
|
|
|
|
|
Income Tax Expense
(Benefit) |
3.0 |
|
|
4.9 |
|
|
7.5 |
|
|
9.2 |
|
|
|
|
|
|
|
|
|
Net Income |
$ |
14.6 |
|
|
$ |
24.2 |
|
|
$ |
38.3 |
|
|
$ |
44.7 |
|
|
|
|
|
|
|
|
|
Basic and Diluted
Income per Share: |
|
|
|
|
|
|
|
Basic |
$ |
0.39 |
|
|
$ |
0.65 |
|
|
$ |
1.02 |
|
|
$ |
1.20 |
|
Diluted |
$ |
0.39 |
|
|
$ |
0.64 |
|
|
$ |
1.02 |
|
|
$ |
1.19 |
|
|
|
|
|
|
|
|
|
Cash Dividends: |
|
|
|
|
|
|
|
Common
Stock |
$ |
0.11 |
|
|
$ |
0.09 |
|
|
$ |
0.22 |
|
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
Weighted Average Number
of Common Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
37,405,550 |
|
|
37,283,500 |
|
|
37,377,997 |
|
|
37,266,095 |
|
Diluted |
37,673,722 |
|
|
37,668,100 |
|
|
37,648,048 |
|
|
37,629,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
METHODE ELECTRONICS, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(in millions, except per share
data)
|
October 27, 2018 |
|
April 28, 2018 |
|
(Unaudited) |
|
|
Assets: |
|
|
|
Current Assets: |
|
|
|
Cash and Cash
Equivalents |
$ |
110.9 |
|
|
$ |
246.1 |
|
Accounts
Receivable, Net |
229.8 |
|
|
202.6 |
|
Inventories: |
|
|
|
Finished
Products |
27.3 |
|
|
15.4 |
|
Work in
Process |
9.4 |
|
|
14.6 |
|
Materials |
81.6 |
|
|
54.1 |
|
Total
Inventories |
118.3 |
|
|
84.1 |
|
Prepaid
and Refundable Income Taxes |
10.4 |
|
|
2.4 |
|
Prepaid
Expenses and Other Current Assets |
21.7 |
|
|
14.8 |
|
Total Current
Assets |
491.1 |
|
|
550.0 |
|
Property Plan and
Equipment: |
|
|
|
Land |
3.6 |
|
|
0.8 |
|
Buildings
and Building Improvements |
73.8 |
|
|
69.2 |
|
Machinery
and Equipment |
382.9 |
|
|
364.7 |
|
Property,
Plant and Equipment, Gross |
460.3 |
|
|
434.7 |
|
Less:
Allowances for Depreciation |
272.4 |
|
|
272.5 |
|
Property, Plant and
Equipment, Net |
187.9 |
|
|
162.2 |
|
Other Assets: |
|
|
|
Goodwill |
233.9 |
|
|
59.2 |
|
Other
Intangible Assets, Net |
275.1 |
|
|
61.0 |
|
Cash
Surrender Value of Life Insurance |
8.5 |
|
|
8.2 |
|
Deferred
Income Taxes |
32.7 |
|
|
42.3 |
|
Pre-production Costs |
28.7 |
|
|
20.5 |
|
Other |
12.6 |
|
|
12.5 |
|
Total Other Assets |
591.5 |
|
|
203.7 |
|
Total Assets |
$ |
1,270.5 |
|
|
$ |
915.9 |
|
Liabilities and
Shareholders' Equity: |
|
|
|
Current
Liabilities: |
|
|
|
Accounts
Payable |
$ |
105.6 |
|
|
$ |
89.5 |
|
Salaries,
Wages and Payroll Taxes |
21.3 |
|
|
22.8 |
|
Other
Accrued Expenses |
33.2 |
|
|
21.6 |
|
Short-term Debt |
15.3 |
|
|
4.4 |
|
Income
Tax Payable |
16.8 |
|
|
18.7 |
|
Total Current
Liabilities |
192.2 |
|
|
157.0 |
|
Long-term Debt |
342.3 |
|
|
53.4 |
|
Long-term Income Taxes
Payable |
38.9 |
|
|
42.6 |
|
Other Liabilities |
4.2 |
|
|
4.6 |
|
Deferred Income
Taxes |
39.8 |
|
|
18.3 |
|
Deferred
Compensation |
9.8 |
|
|
10.0 |
|
Total Liabilities |
627.2 |
|
|
285.9 |
|
Shareholders'
Equity: |
|
|
|
Common
Stock, $0.50 par value, 100,000,000 shares authorized, 38,198,353
shares and 38,133,925 shares issued as of April 28, 2018 and April
29, 2017, respectively |
19.2 |
|
|
19.1 |
|
Additional Paid-in Capital |
147.3 |
|
|
136.5 |
|
Accumulated Other Comprehensive Income (Loss) |
(11.7 |
) |
|
13.9 |
|
Treasury
Stock, 1,346,624 shares as of April 28, 2018 and April 29,
2017 |
(11.5 |
) |
|
(11.5 |
) |
Retained
Earnings |
500.0 |
|
|
472.0 |
|
Total Shareholders'
Equity |
643.3 |
|
|
630.0 |
|
Total Liabilities and
Shareholders' Equity |
$ |
1,270.5 |
|
|
$ |
915.9 |
|
|
|
|
|
|
|
|
|
METHODE ELECTRONICS, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(in millions)
|
|
Six Months Ended |
|
|
October 27, 2018 |
|
October 28, 2017 |
Operating
Activities: |
|
|
|
|
Net Income |
|
$ |
38.3 |
|
|
$ |
44.7 |
|
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities: |
|
|
|
|
Gain on
Sale of Licensing Agreement |
|
— |
|
|
— |
|
Provision
for Depreciation |
|
12.8 |
|
|
11.2 |
|
Amortization of Intangible Assets |
|
5.6 |
|
|
1.7 |
|
Stock-based Compensation |
|
10.9 |
|
|
7.2 |
|
Provision
for Bad Debt |
|
0.1 |
|
|
0.1 |
|
Change in
Deferred Income Taxes |
|
(0.4 |
) |
|
— |
|
Changes
in Operating Assets and Liabilities: |
|
|
|
|
Accounts
Receivable |
|
(8.2 |
) |
|
(15.6 |
) |
Inventories |
|
(5.2 |
) |
|
(2.5 |
) |
Prepaid
Expenses and Other Assets |
|
(13.0 |
) |
|
(3.5 |
) |
Accounts
Payable and Other Expenses |
|
(4.0 |
) |
|
1.9 |
|
Net Cash Provided by
Operating Activities |
|
36.2 |
|
|
45.2 |
|
Investing
Activities: |
|
|
|
|
Purchases
of Property, Plant and Equipment |
|
(28.6 |
) |
|
(16.4 |
) |
Acquisition of Business, Net of Cash Received |
|
(421.6 |
) |
|
(129.9 |
) |
Purchases
of Technology Licenses, Net |
|
— |
|
|
— |
|
Sale of
Business/Investment/Property |
|
0.7 |
|
|
0.3 |
|
Net Cash Used in
Investing Activities |
|
(449.5 |
) |
|
(146.0 |
) |
Financing
Activities: |
|
|
|
|
Taxes
Paid Related to Net Share Settlement of Equity Awards |
|
(1.7 |
) |
|
(0.3 |
) |
Purchase
of Common Stock |
|
— |
|
|
— |
|
Proceeds
from Exercise of Stock Options |
|
— |
|
|
— |
|
Tax
Benefit from Stock Option Exercises |
|
— |
|
|
— |
|
Cash
Dividends |
|
(8.6 |
) |
|
(6.8 |
) |
Proceeds
from Borrowings |
|
348.0 |
|
|
61.1 |
|
Repayment
of Borrowings |
|
(46.6 |
) |
|
(2.8 |
) |
Net Cash Used in
Financing Activities |
|
291.1 |
|
|
51.2 |
|
Effect of Foreign
Currency Exchange Rate Changes on Cash |
|
(13.0 |
) |
|
14.2 |
|
Increase (Decrease) in
Cash and Cash Equivalents |
|
(135.2 |
) |
|
(35.4 |
) |
Cash and Cash
Equivalents at Beginning of Year |
|
246.1 |
|
|
294.0 |
|
Cash and Cash
Equivalents at End of Period |
|
$ |
110.9 |
|
|
$ |
258.6 |
|
|
|
|
|
|
|
|
|
|
METHODE ELECTRONICS, INC. AND
SUBSIDIARIES(Unaudited)($ in
millions, except per share data)
Income From Operations Non-GAAP
Reconciliation
|
Three Months Ended |
|
Six Months Ended |
|
October 27, |
|
October 28, |
|
October 27, |
|
October 28, |
2018 |
2017 |
2018 |
2017 |
Income From
Operations |
$ |
19.1 |
|
$ |
29.7 |
|
$ |
47.8 |
|
$ |
55.1 |
|
|
|
|
|
|
|
|
Long-term Incentive
Plan Accrual Adjustment |
|
5.7 |
|
|
— |
|
|
3.7 |
|
|
— |
|
|
|
|
|
|
|
|
Acquisition-related
Costs - Other |
|
6.9 |
|
|
3.4 |
|
|
7.5 |
|
|
6.0 |
|
|
|
|
|
|
|
|
Acquisition-related
Costs - Inventory |
|
2.6 |
|
|
0.8 |
|
|
2.6 |
|
|
0.8 |
|
|
|
|
|
|
|
|
Acquisition-related
Costs - Severance |
|
1.4 |
|
|
— |
|
|
1.4 |
|
|
— |
|
|
|
|
|
|
|
|
Adjusted Income From
Operations |
$ |
35.7 |
|
$ |
33.9 |
|
$ |
63.0 |
|
$ |
61.9 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Non-GAAP Reconciliation
|
Three Months Ended |
|
Six Months Ended |
|
October 27, |
|
October 28, |
|
October 27, |
|
October 28, |
2018 |
2017 |
2018 |
2017 |
Net Income |
$ |
14.6 |
|
$ |
24.2 |
|
$ |
38.3 |
|
$ |
44.7 |
|
|
|
|
|
|
|
|
Long-term Incentive
Plan Accrual Adjustment, Net of Tax |
|
4.7 |
|
|
— |
|
|
3.1 |
|
|
— |
|
|
|
|
|
|
|
|
Acquisition-related
Costs - Other, Net of Tax |
|
5.7 |
|
|
2.8 |
|
|
6.3 |
|
|
5.0 |
|
|
|
|
|
|
|
|
Acquisition-related
Costs - Inventory, Net of Tax |
|
2.2 |
|
|
0.7 |
|
|
2.2 |
|
|
0.7 |
|
|
|
|
|
|
|
|
Acquisition-related
Costs - Severance, Net of Tax |
|
1.2 |
|
|
— |
|
|
1.2 |
|
|
— |
|
|
|
|
|
|
|
|
Adjusted Net
Income |
$ |
28.4 |
|
$ |
27.7 |
|
$ |
51.1 |
|
$ |
50.4 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Income per Share Non-GAAP
Reconciliation
|
Three Months Ended |
|
Six Months Ended |
|
October 27, |
|
October 28, |
|
October 27, |
|
October 28, |
2018 |
2017 |
2018 |
2017 |
Diluted Income per
Share |
$ |
0.39 |
|
$ |
0.64 |
|
$ |
1.02 |
|
$ |
1.19 |
|
|
|
|
|
|
|
|
Effects on Diluted
Income per Share: |
|
|
|
|
|
|
|
Long-term
Incentive Plan Accrual Adjustment, Net of Tax |
|
0.12 |
|
|
— |
|
|
0.08 |
|
|
— |
|
|
|
|
|
|
|
|
Acquisition-related
Costs - Other, Net of Tax |
|
0.15 |
|
|
0.08 |
|
|
0.17 |
|
|
0.13 |
|
|
|
|
|
|
|
|
Acquisition-related
Costs - Inventory, Net of Tax |
|
0.06 |
|
|
0.02 |
|
|
0.06 |
|
|
0.02 |
|
|
|
|
|
|
|
|
Acquisition-related
Costs - Severance, Net of Tax |
|
0.03 |
|
|
— |
|
|
0.03 |
|
|
— |
|
|
|
|
|
|
|
|
Adjusted Diluted Income
per Share |
$ |
0.75 |
|
$ |
0.74 |
|
$ |
1.36 |
|
$ |
1.34 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit Non-GAAP Reconciliation
|
Three Months Ended |
|
Six Months Ended |
|
October 27, |
|
October 28, |
|
October 27, |
|
October 28, |
2018 |
2017 |
2018 |
2017 |
Gross Profit |
$ |
70.8 |
|
|
$ |
62.0 |
|
|
$ |
130.9 |
|
|
$ |
117.6 |
|
Gross
Profit Margin |
|
26.8 |
% |
|
|
26.9 |
% |
|
|
26.9 |
% |
|
|
27.3 |
% |
|
|
|
|
|
|
|
|
Acquisition-related
Costs - Inventory |
|
2.6 |
|
|
|
0.8 |
|
|
|
2.6 |
|
|
|
0.8 |
|
|
|
|
|
|
|
|
|
Adjusted Gross
Profit |
$ |
73.4 |
|
|
$ |
62.8 |
|
|
$ |
133.5 |
|
|
$ |
118.4 |
|
Adjusted
Gross Profit Margin |
|
27.8 |
% |
|
|
27.3 |
% |
|
|
27.4 |
% |
|
|
27.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and Administrative Expenses Non-GAAP
Reconciliation
|
Three Months Ended |
|
Six Months Ended |
|
October 27, |
|
October 28, |
|
October 27, |
|
October 28, |
2018 |
2017 |
2018 |
2017 |
Selling and
Administrative Expenses |
$ |
48.0 |
|
|
$ |
31.2 |
|
|
$ |
77.5 |
|
|
$ |
60.8 |
|
Selling
and Administrative Expenses as a Percentage of Sales |
18.2 |
% |
|
13.6 |
% |
|
15.9 |
% |
|
14.1 |
% |
|
|
|
|
|
|
|
|
Long-term Incentive
Plan Accrual Adjustment |
5.7 |
|
|
— |
|
|
3.7 |
|
|
— |
|
|
|
|
|
|
|
|
|
Acquisition-related
Costs - Other |
6.9 |
|
|
3.4 |
|
|
7.5 |
|
|
6.0 |
|
|
|
|
|
|
|
|
|
Acquisition-related
Costs - Severance |
1.4 |
|
|
— |
|
|
1.4 |
|
|
— |
|
|
|
|
|
|
|
|
|
Adjusted Selling and
Administrative Expenses |
$ |
34.0 |
|
|
$ |
27.8 |
|
|
$ |
64.9 |
|
|
$ |
54.8 |
|
Adjusted
as a Percentage of Sales |
12.9 |
% |
|
12.1 |
% |
|
13.3 |
% |
|
12.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Methode Electronics (NYSE:MEI)
Historical Stock Chart
From Aug 2024 to Sep 2024
Methode Electronics (NYSE:MEI)
Historical Stock Chart
From Sep 2023 to Sep 2024