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| Statement |
|---|
| We returned to a positive free cash flow position, and we continued our share purchase program |
| I'm confident that the foundation of the business is strong and the potential for greater success is evident |
| That leveling off was aided by a return to positive free cash flow |
| Our company foundation is strong with a rich legacy of innovation and an unwavering commitment to excellence |
| I have been impressed with the talent in our organization the depth and breadth of engineering capability across the company and our strong customer relationships |
| I can share that the pipeline of potential awards remain healthy |
| Sales in the quarter were helped by the acquisition of Nordic Lights in the Industrial segment |
| A new chapter in the journey for Methode has begun, and I'm excited and energized by the possibilities ahead |
| I would say that they're not exactly similar, but there's learnings from both to bring to the company here, where there are declining trends where we put in on a turnaround trajectory, where we also lived both on the bottom line and the top line to do better performance |
| EV is clearly a long-term tailwind for Methode, but the path will certainly not be linear |
| There is plenty of room for improvement on cash flow, but it was a step in the right direction |
| After having negative free cash flow in the first two quarters of the year, we returned to positive free cash flow in the third quarter |
| Before we discuss the quarter, I would like to share with you that I’m truly honored and humbled to be Methode's third CEO in its 77-year history |
| I was not a CEO before, but as I came into different businesses in DuPont, I had an opportunity to restructure and reposition for growth with businesses that were declining in revenue, but we then put it onto a significant growth trajectory, both organically and inorganically |
| I look forward to building on that foundation and charting our course towards even greater success for the organization |
| Avi Avula Gary, nice to meet you |
| I would also like to take this opportunity to thank Don Duda for his outstanding contributions to Methode and for his support during my transition and to wish him the very best in his retirement |
| As Avi mentioned, we are taking multiple actions to increase our cash generation and EBITDA performance because both of those levers as you correctly mentioned, look on repatriation and things of that nature, that is a lever that we can pull to take down the net debt, which is the other part of the equation |
| The data center market did show some signs of recovery for us |
| And while I still yet to see all our sites, I've got a good sense of the current business and where we are |
| Overall, we saw a stabilization in debt and cash levels in the quarter |
| This quarter sales included $21.2 million from the Nordic Life acquisition and $1.5 million from favorable currency translation |
| But the long-term, my view is to build a future for the company and that's based on the foundation we have today and take it into the future |
| We will be laser-focused on reducing working capital, particularly inventory and increasing free cash flow |
| And there's a lot of learning from there that I can bring and learning from elsewhere to bring on future growth for the company |
| John Franzreb Good morning and thanks for taking the questions everyone |
| Luke Junk Good morning -- for taking the questions |
| We are taking actions to mitigate these launch costs, which range from customer reimbursement to internal cost reductions |
| Thank you very much |
| Thank you |
| Statement |
|---|
| In summary for the quarter, sales were under pressure from auto program roll-offs and market headwinds in the EV, e-bike and data center markets |
| We also had new weakness in EV demand and persistent softness in the e-bike and data center markets |
| Luke, from where we were when we gave our guidance to where we ended up, sales were definitely softer |
| Income was down through the lower sales volume and the ongoing operational inefficiencies, which are mainly in North American auto and drove inventory adjustments, scrap expenses and higher labor and freight costs |
| The decrease was primarily due to program roll-offs and EV demand weakness along with some continued softness in the e-bike market |
| The EPS was negatively impacted by the lower operating income and higher net interest expense |
| We also continue to see increased costs related to our numerous new program launches, some of these costs are driven by a lack of absorption due to customer program delays |
| Our sales for the quarter were $260 million, which were down $21 million year-over-year |
| EBITDA was negatively impacted by lower sales volume, lower gross profit and higher selling and administrative expenses |
| All of this is taking place with the backdrop of a softening near-term outlook in the EV market |
| The lower sales, along with the continued operational inefficiencies in our North American auto operations drove the net loss in the quarter |
| As we've shared that the softness was coming from the auto market mainly across our businesses worldwide, primarily because of some slowdowns in EV demand rate and our customers |
| Third quarter diluted earnings per share decreased to negative $0.33 from a positive $0.54 in the same period last fiscal year |
| We also saw higher costs in Europe due to the shipping constraints in the Red Sea |
| We had operational inefficiencies as well that contributed to the delta in pre-tax |
| Third quarter net sales were $259.5 million compared to $280.1 million in fiscal '23, a decrease of 7% |
| The e-bike market continues to be in an overstock position |
| The lower sales volume and persistent operational inefficiencies in our auto segment drove a net loss |
| Some of these issues may have been more challenging than we thought earlier |
| The first quarter and the second quarter of next fiscal year goes down to 4 in each of those quarters |
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