Methode Electronics Clocks 4% Revenue Decline In Q4 Due To Lower Sales Volumes In Auto Segment

Methode Electronics, Inc MEI reported a fourth-quarter FY22 net sales decline of 4.1% year-on-year to $288.7 million, missing the consensus of $289.5 million.
The decrease was due to lower sales volumes in the Automotive segment due to supply chain constraints and the conflict in Ukraine.
EPS of $0.43 missed the consensus of $0.56.
Segments: The Automotive segment's net sales decreased 4.9% Y/Y to $194.3 million.
Net sales for the Industrial segment fell by 3.2% Y/Y to $78.9 million, and the Interface segment declined 2.1% Y/Y to $13.9 million.
Margin: The operating margin contracted 614 bps to 5.1% due to lower sales, higher material, and other costs associated with supply chain disruptions.
Methode Electronic held $172 million in cash and equivalents. It generated $42 million in operating cash flow.
CEO Donald W. Duda said, "The quarter presented various challenges mainly from market disruptions and supply chain constraints that evolved faster than the Methode team was able to mitigate despite our best efforts."
Duda added, "Our sales into electric vehicle applications slipped in the quarter due to the China lockdown but are poised to reach 20% of total sales in fiscal 2023. Overall, we expect continued sales growth as well as renewed earnings growth in fiscal 2023. Lastly, we are introducing a three-year organic sales growth target of 6%."
Outlook, unchanged: Methode Electronic sees FY23 revenue of $1.16 billion - $1.21 billion against the consensus of $1.19 billion.
It sees EPS of $2.70- $3.10 versus the consensus of $3.06.
Price Action: MEI shares traded lower by 2.49% at $37.13 on the last check Thursday.

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