Methode Electronics, Inc. Reports Fiscal 2019 Second-Quarter Sales and Earnings

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CHICAGO, Dec. 06, 2018 (GLOBE NEWSWIRE) -- , a global developer of custom-engineered and application-specific products and solutions, announced financial results for the second quarter of Fiscal 2019 ended October 27, 2018.

GAAP net income decreased $9.6 million to $14.6 million, or $0.39 per share, in the second quarter of Fiscal 2019 from income of $24.2 million, or $0.64 per share, in the same period of Fiscal 2018.

Adjusted net income, a non-GAAP financial measure, was $28.4 million, or $0.75 per share, in the second quarter of Fiscal 2019 compared to $27.7 million, or $0.74 per share, in the same period of Fiscal 2018. Adjusted net income for all periods excludes acquisition-related expenses, including purchase accounting adjustments for the Fiscal 2019 periods, and stock award amortization expense due to the revised Fiscal 2020 EBITDA estimate of the long-term incentive program.

Year over year, Fiscal 2019 second-quarter GAAP net income was negatively affected by:

Year over year, Fiscal 2019 second-quarter GAAP net income benefitted from:

Consolidated gross margins as a percentage of net sales were virtually unchanged at 26.8 percent in the Fiscal 2019 second quarter from 26.9 percent in the Fiscal 2018 period. Year over year, gross margins were negatively impacted by an unfavorable sales mix in the Automotive and Interface segments, the purchase accounting adjustment related to Grakon inventory and customer pricing reductions. Gross margins were positively impacted by a favorable sales mix in the Industrial segment and the favorable currency impact. Adjusted gross margins as a percentage of sales, a non-GAAP financial measure, increased to 27.8 percent in the Fiscal 2019 second quarter from 27.3 percent in the same period of Fiscal 2018 and exclude purchase accounting adjustments related to inventory and severance in the applicable periods.

Selling and administrative expenses as a percentage of sales increased to 18.2 percent for the Fiscal 2019 second quarter compared to 13.6 percent in the same period last year due primarily to higher stock award amortization expense, increased acquisition-related costs, purchase accounting adjustments related to Grakon severance, as well as selling and administrative expenses attributable to the Pacific Insight and Grakon acquisitions, partially offset by lower legal fees. Adjusted selling and administrative expenses as a percentage of sales, a non-GAAP financial measure, were 12.9 percent in the Fiscal 2019 second quarter compared to 12.1 percent in the prior-year second quarter and exclude acquisition-related expenses, including purchase accounting adjustments, and stock award amortization expense due to the revised Fiscal 2020 EBITDA estimate of the long-term incentive program in the applicable periods.

Year over year, intangible asset amortization expense in the second quarter of Fiscal 2019 increased $2.6 million, or 236.4 percent, to $3.7 million, due to amortization expense related to the Pacific Insight and Grakon acquisitions.

In the Fiscal 2019 second quarter, income tax expense decreased $1.9 million to $3.0 million compared to $4.9 million in the Fiscal 2018 second quarter primarily due to lower pre-tax income in the Fiscal 2019 period. The Company’s effective tax rate increased to 17.0 percent in the Fiscal 2019 period from 16.8 percent in the previous second quarter.

Comparing the Automotive segment's Fiscal 2019 second quarter to the same period of Fiscal 2018,

Comparing the Industrial segment's Fiscal 2019 second quarter to the same period of Fiscal 2018,

Comparing the Interface segment's Fiscal 2019 second quarter to the same period of Fiscal 2018,

Comparing the Medical segment's Fiscal 2019 second quarter to the same period of Fiscal 2018,

GAAP net income decreased $6.4 million to $38.3 million, or $1.02 per share, in the first-half of Fiscal 2019 from $44.7 million, or $1.19 per share, in the same period of Fiscal 2018.

Adjusted net income, a non-GAAP financial measure, increased to $51.1 million, or $1.36 per share, in the first half of Fiscal 2019 compared to $50.4 million, or $1.34 per share, in the same period of Fiscal 2018. Adjusted net income for all periods excludes acquisition-related expenses, including purchase accounting adjustments for the Fiscal 2019 periods, and stock award amortization expense due to the revised Fiscal 2020 EBITDA estimate of the long-term incentive program.

Year over year, first-half Fiscal 2019 GAAP net income was negatively affected by:

Year over year, first-half Fiscal 2019 GAAP net income benefitted from:

Consolidated gross margins as a percentage of sales decreased to 26.9 percent in the first-half of Fiscal 2019 from 27.3 percent in the first-half of Fiscal 2018. Gross margins declined primarily as a result of an unfavorable sales mix in the Automotive and Interface segments, the purchase accounting adjustment related to Grakon inventory and customer pricing reductions, partially offset by a favorable sales mix in the Industrial segment and a favorable currency impact. Adjusted gross margins as a percentage of sales, a non-GAAP financial measure, were stable at 27.4 percent in the Fiscal 2019 first half compared to 27.5 percent in the Fiscal 2018 period.

Selling and administrative expenses as a percentage of sales increased to 15.9 percent for the first-half of Fiscal 2019 compared to 14.1 percent in the first-half of Fiscal 2018 due primarily to higher stock award amortization expense due to the revised Fiscal 2020 EBITDA estimate related to the long-term incentive program, increased acquisition-related costs, purchase accounting adjustments related to Grakon severance, as well as selling and administrative expenses attributable to the Pacific Insight, Procoplast and Grakon acquisitions and higher compensation and related costs, partially offset by lower legal fees. Adjusted selling and administrative expenses as a percentage of sales, a non-GAAP financial measure, were 13.3 percent in the Fiscal 2019 first half compared to 12.7 percent in the prior-year first half.

Year over year, intangible asset amortization expense in the first-half of Fiscal 2019 increased $3.9 million, or 229.4 percent, to $5.6 million, due to the Pacific Insight, Procoplast and Grakon acquisitions.

In the first-half of Fiscal 2019, income tax expense decreased $1.7 million to $7.5 million compared to $9.2 million in the first-half of Fiscal 2018 primarily due to lower pretax income and higher investment tax credits. The Company’s effective tax rate decreased to 16.4 percent in the first-half of Fiscal 2019 from 17.1 percent in the first-half of Fiscal 2018.

Comparing the Industrial segment's Fiscal 2019 first half to the same period of Fiscal 2018,

Comparing the Interface segment's Fiscal 2019 first half to the same period of Fiscal 2018,

Comparing the Medical segment's Fiscal 2019 first half to the same period of Fiscal 2018,

Fiscal 2019 guidance considers:

The guidance ranges for Fiscal 2019 are based upon management's expectations regarding a variety of factors and involve a number of risks and uncertainties, including, but not limited to, the following:

"Our strong cash flow generation has allowed us to invest in technologies, businesses and end markets, such as Dabir, magneto-elastic torque sensing, LED lighting, EV power distribution and now Grakon, which provide Methode the ability to continue to grow and increase long-term value despite the anticipated headwinds occurring in the Automotive market."

To participate in the conference call, please dial (877) 407-9210 (domestic) or (201) 689-8049 (international) at least five minutes prior to the start of the event. A simultaneous Webcast can be accessed through the Company’s Web site, , by selecting the Investor Relations page, and then clicking on the “Webcast” icon.

A replay of the conference call will be available shortly after the call through January 6, 2019, by dialing (877) 481-4010 and providing Conference ID number 37159. On the Internet, a replay will be available for 30 days through the Company’s Web site, , by selecting the Investor Relations page and then clicking on the “Webcast” icon.

Steve CarrDresner Corporate Services312-780-7211scarr@dresnerco.com

Income From Operations Non-GAAP Reconciliation

Net Income Non-GAAP Reconciliation

Diluted Income per Share Non-GAAP Reconciliation

Gross Profit Non-GAAP Reconciliation

Selling and Administrative Expenses Non-GAAP Reconciliation

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Globe Newswire: 12:00 GMT Thursday 6th December 2018

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