Earnings Review and Free Research Report: Methode Electronics Reported Better than Expected Sales and Earnings Results
Research Desk Line-up: Sparton Post Earnings Coverage
LONDON, UK / ACCESSWIRE / September 22, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Methode Electronics, Inc. (NYSE: MEI), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=MEI, following the Company's release of its first quarter fiscal 2018 financial results on August 31, 2017. The maker of electrical components for the auto and computer industries reported a 4.8% gain in sales and re-affirmed its guidance for the fiscal year. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Earnings Reviewed
Methode Electronics' first-quarter fiscal 2018 net sales increased 4.8% to $201.2 million from $191.9 million in Q1 FY17. The Company stated that currency rate fluctuations decreased net sales $0.3 million in the reported quarter. Methode Electronics' sales beat analysts' estimates of $189.8 million.
For Q1 FY18, Methode Electronics' consolidated gross margins as a percentage of sales decreased to 27.6% from 28.2% in the year-ago corresponding period, primarily as a result of new product development costs in the Automotive segment, lower sales volumes, and unfavorable sales mix in the Interface segment and unfavorable sales mix and unfavorable commodity pricing in the Power Products segment.
Methode Electronics' selling and administrative expenses as a percentage of sales increased to 14.7% in Q1 FY18 compared to 14.0% in Q1 FY17. The Company's selling and administrative expenses increased 10.4% to $29.6 million in Q1 FY18 compared to $26.8 million in the prior year's same quarter due primarily to acquisition-related expense, higher bonus expense, and increased investment in Dabir and higher stock award amortization expenses.
For Q1 FY18, Methode Electronics' net income decreased $0.7 million to $20.5 million, or $0.55 per share, from $21.2 million, or $0.57 per share, in Q1 FY17. During the reported quarter, the Company incurred $2.8 million of acquisition-related expenses. The Company's earnings topped Wall Street's estimates of $0.48 per share.
Methode Electronics' free cash flow was $18.1 million for Q1 FY18. The Company is forecasting fiscal 2018 free cash flow to be between $90 million and $100 million.
Methode Electronics' Segment Comparisons
Automotive - During Q1 FY18, the Automotive segment's net sales increased 6.4% on a y-o-y basis, attributable to a 15.3% sales improvement in Europe driven by increased integrated center panel and steering wheel switch product volumes, partially offset by decreased customer funded tooling sales, and a 5.7% sales increase in North America primarily due to higher General Motors' center console volumes, offset in part by pricing concessions.
For Q1 FY18, the Automotive segment's gross margins as a percentage of sales declined to 29.3% from 30.2% in Q1 FY17 due to development costs for new products and unfavorable commodity pricing.
Interface - During Q1 FY18, the Interface segment's net sales dropped 10.6% on a y-o-y basis, driven by a 14.4% sales decline in North America driven mainly by the exit of Connectivity at the end of fiscal 2017, as well as lower appliance and data solutions product volumes, partially offset by higher radio remote control product volume and a 41.7% sales decrease in Asia due to lower legacy product volume.
For Q1 FY18, the Interface segment's gross margins as a percentage of sales decreased to 21.8% from 23.7% due to lower sales volumes and unfavorable sales mix of appliance products. The segment's income from operations improved to $0.4 million from a loss of $0.7 million in the year-earlier same quarter driven by lower legal, travel, and advertising expenses, partially offset by unfavorable appliance products' sales mix.
Power Products - During Q1 FY18, the Power Products segment's net sales increased 26.7% driven by a 158.3% sales improvement in Europe driven by increased bypass switch product volume, an 18.4% sales increase in Asia due to higher busbar product volumes and a 6.8% sales improvement in North America as the result of higher busbar product volumes.
For Q1 FY18, the Power Products segment's gross margins as a percentage of sales decreased to 27.6% from 28.3% due to unfavorable sales mix and unfavorable commodity pricing, partially offset by a favorable currency impact for labor and certain factory expenses.
Dividend Declaration
On September 14, 2017, Methode Electronics announced that its Board of Directors has declared a quarterly dividend of $0.09 per share to be paid on October 27, 2017, to common stockholders of record at the close of business on October 13, 2017.
Guidance
Methode Electronics re-affirmed its fiscal 2018 guidance of sales in the range of $807 million to $827 million, pre-tax income from operations in the band of $114 million to $127 million and earnings per share between $2.43 to $2.63.
Stock Performance
On Thursday, September 21, 2017, the stock closed the trading session flat at $40.00. A total volume of 147.44 thousand shares have exchanged hands. Methode Electronics' stock price surged 5.54% in the last one month and 14.06% in the previous twelve months. The stock is trading at a PE ratio of 16.26 and has a dividend yield of 0.90%. The stock currently has a market cap of $1.46 billion.
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