CHICAGO – Methode Electronics reported fiscal third quarter net sales were $295.3 million, up 3.3% year-over-year, including a favorable foreign currency impact of $9.7 million.
On a weekly run rate basis and excluding the foreign currency impact, adjusted net sales were up 7.6% compared to the same quarter of fiscal 2020. The increase was due in part to higher sales of electric and hybrid vehicle products. Electric and hybrid vehicle applications were over 12% of net sales.
For the fiscal third quarter ended Jan. 30, the company's accounting period included 13 weeks compared to 14 weeks for the fiscal third quarter ended Feb. 1, 2020.
Net income during the period was $31.9 million, down 22.6% year-over-year. The decrease was primarily due to premium freight and factory inefficiencies resulting from supply chain disruptions due to Covid-19 and, to a lesser extent, tariff expense and product sales mix. Also contributing were lower other income and higher income tax expense.
EBITDA was $51.3 million, a decrease of 12.6% compared to the same quarter in the prior year.
Net cash provided by operating activities was $87.1 million. Debt at the end of the quarter was $244.6 million, compared to $352.1 million at the end of fiscal 2020.
The company repaid $100 million on its revolving credit facility from its March 2020 draw. Net debt was $25.9 million, compared to $134.8 million at the end of fiscal 2020.
Free cash flow was $82.2 million, compared to $6.7 million in the same quarter the prior year. The increase was mainly due to working capital improvements.
Fiscal third quarter automotive segment net sales were $210.5 million, up 0.1% year-over-year. Higher sales of electric and hybrid vehicle products were offset by lower lighting and sensor product sales. The segment’s net sales were positively impacted $7.5 million from foreign currency translation.
For the fiscal fourth quarter, the company expects net sales in the range of $270 million to $300 million. The lower end of the guidance range contemplates additional supply chain disruptions.
For the nine months ended Jan. 30, net sales were $787 million, a decrease of 3.2% year-over-year. Net income was $91.2 million, down 2.3%.
“Despite supply chain challenges, Methode was able to meet the high end of our sales guidance and increase our EV sales,” said president and CEO Donald W. Duda. “In doing so, we also generated substantial free cash flow, which in turn allowed us to further pay down debt, providing Methode with an even stronger balance sheet.
"We will continue to face near term market uncertainty due to the semiconductor shortage, as well as other supply chain and related factory inefficiencies. Those factors, along with weather-related supply chain disruptions, are driving our wide guidance range. However, our order book for EV programs gives us the confidence to increase our projection for fiscal 2022 sales from EV applications to a mid-teens percentage. Furthermore, and subject to resolution of the supply chain challenges by mid-calendar year, we anticipate Methode’s consolidated fiscal 2022 organic sales to grow in excess of 10%."
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