Methode Electronics Reports Mixed Q2 Results; Slashes FY22 Outlook Citing Supply Chain Disruptions

Methode Electronics Inc MEI reported the second-quarter FY22 net sales decline of 1.8% year-on-year to $295.5 million, beating the consensus of $275.8 million.

• The decrease was due to lower sales volumes in the Automotive segment, partially offset by higher sales volumes in the Industrial segment.
• EPS of $0.72 missed the consensus of $0.73.
• Segments: The Automotive segment's net sales decreased 9.1% Y/Y to $196 million. 
• Net sales for the Industrial segment grew 18.9% Y/Y to $80.7 million, and the Interface segment rose 9.8% Y/Y to $18 million.
• Margin: The operating margin contracted 380 bps to 11.2% due to higher material and other costs associated with supply chain disruptions.
• Methode Electronic held $177.2 million in cash and equivalents. It generated $27 million in operating cash flow during Q2.
• CEO Donald W. Duda said, "While our businesses continued to be impacted by the ongoing supply chain and logistics disruptions, our mitigation efforts helped support solid sales, including a strong performance in the Industrial segment and a record for EV applications."
• Outlook: Methode Electronic cut the FY22 outlook from $1.175 billion - $1.235 billion to $1.14 billion - $1.16 billion against the consensus of $1.14 billion.
• The company cut the EPS outlook from $3.35 - $3.75 to $3.00 - $3.20 versus the consensus of $3.15.
• Price Action: MEI shares closed higher by 0.79% at $44.82 on Wednesday.