Methode Electronics, Inc. (NYSE: MEI), a global
developer of custom engineered and application specific products
and solutions, today announced preliminary, unaudited financial
results for the fiscal year ended May 2, 2020 (Fiscal 2020) and
provided comments on the impact to its business from the COVID-19
pandemic.
“In these extraordinary times, our foremost
focus is on the health and safety of our employees, who have shown
incredible dedication to our organization,” said Donald W. Duda,
Methode Electronics President and Chief Executive Officer. “We are
taking the appropriate steps to protect our employees, address the
work environment in our facilities, and support our customers in a
safe manner.”
“Faced with an unprecedented near-simultaneous
production shutdown by several of our main customers, I am pleased
that our pre-COVID-19 fourth quarter of Fiscal 2020 performance
partially offset that negative impact. This is the result of a
robust start to the quarter as well as our increasingly diverse
product, customer, and geographic base, which includes businesses
deemed ‘essential’ providing an ongoing order stream. For the
fiscal year, despite headwinds from the tariffs, the United Auto
Workers (UAW) labor strike at General Motors (GM), and the impact
from COVID-19, we are reporting a record year in sales and pre-tax
income.”
Mr. Duda continued, “In light of the impact from
the COVID-19 pandemic, we are taking multiple proactive measures to
control costs and manage liquidity, including the previously
disclosed drawdown of $100 million from our $200 million revolving
credit facility which was purely a precautionary measure to
preserve financial flexibility in light of the current uncertainty
and to remain opportunistic. I am confident that our strong balance
sheet will not only help us navigate the current environment but
also positively position Methode for the eventual recovery phase of
this global macroeconomic situation."
Preliminary Financial Results for Fiscal
2020During the fourth quarter of Fiscal 2020, the Company
experienced a significant impact to its performance due to the
mid-March shutdown of production at its main automotive and
commercial vehicle OEM customers resulting from the COVID-19
pandemic. The production shutdowns at these customers, most of
which continued through the end of the fiscal fourth quarter, had a
total negative impact on the Company of approximately $85 million
in net sales for the fourth quarter.
The Company expects net sales of approximately
$1.02 billion for Fiscal 2020, which would represent a 2 percent
increase from the prior fiscal year. This compares to the
previously provided net sales guidance range of $1.10 to $1.13
billion.
The Company expects income before taxes in a
range of $147 to $149 million for Fiscal 2020. This compares to the
previously provided guidance range of $150.3 to $164.3 million.
Included in this amount is an estimated benefit of approximately
$6.8 million due to a partial reversal of a long-term incentive
plan accrual. This benefit was not included in the Company’s
previously provided guidance and could change based on the actual
audited financial results.
The Company expects diluted earnings per share
in the range of $3.22 to $3.28 for Fiscal 2020. This expected range
compares to the previously provided guidance range of $3.25 to
$3.55.
These preliminary financial results for Fiscal
2020 are currently the Company’s best estimates and are based upon
management's expectations regarding a variety of factors and
involve a number of risks and uncertainties, including, but not
limited to, those identified in its third quarter Fiscal 2020
results released on March 5, 2020, and its most recent 10-K filing.
Actual results may differ from these preliminary results due to the
completion of year-end financial statement preparation, including
finalization of the tax provision, other financial adjustments and
other developments arising between now and the time that the
Company’s audited financial results are finalized.
Methode Electronics will release its Fiscal 2020
results and conduct a conference call and webcast to review
financial and operational highlights, including the impact from the
COVID-19 pandemic and the resulting actions being taken, in its
customary late-June timeframe. No guidance on Fiscal 2021
expectations has been provided by the Company to date.
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, radio remote control, electronic, LED
lighting, wireless and sensing technologies. Our business is
managed on a segment basis, with those segments being Automotive,
Industrial, Interface and Medical. Our components are found in the
primary end-markets of the aerospace, appliance, automotive,
commercial vehicle, construction, consumer and industrial
equipment, communications (including information processing and
storage, networking equipment, wireless and terrestrial voice/data
systems), medical, rail and other transportation industries.
Further information can be found on Methode's website
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 and our ability to mitigate tariffs; (4)
potential impact from the coronavirus outbreak; (5) timing, quality
and cost of new program launches; (6) ability to withstand price
pressure, including pricing reductions; (7) ability to successfully
market and sell Dabir Surfaces products; (8) currency fluctuations;
(9) customary risks related to conducting global operations; (10)
ability to withstand business interruptions; (11) recognition of
goodwill impairment charges; (12) ability to successfully benefit
from acquisitions and divestitures; (13) investment in programs
prior to the recognition of revenue; (14) dependence on the
availability and price of materials; (15) fluctuations in our gross
margins; (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 Grakon 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;
(25) ability to manage our debt levels and any restrictions
thereunder; and (26) costs and expenses due to regulations
regarding conflict minerals.
For Methode Electronics, Inc.Robert K.
CherryVice President Investor
Relationsrcherry@methode.com708-457-4030
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