MEI - Earnings call transcript Q2 2019 | Methode Electronics, Inc.

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Operator

Welcome to the Methode Electronics Fiscal Year 2019 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

For this quarterly conference call, the company has prepared a PowerPoint Presentation entitled fiscal 2019 second quarter earnings which can be found at methode.com in the Investor Relations section. [Operator Instructions] As a reminder, this conference is being recorded. contain and which only operating the hereof. does regarding management’s as call date events future performance conference forward-looking reflects statements, expectations of This and speak provided subject Safe These to statements securities laws. are Harbor forward-looking protection under the a update no in to changes conform forward-looking undertakes on expectations a to Methode or any results otherwise. statements actual statements to duty or Methode’s the quarterly basis

conflict number on differ of program and materially large ability tariffs, resulting disputes call Exchange large uncertainties. automotive, risks withstand including recognition this annual of of the our to the quality tax technology Forward-looking avoid keep conference involve automotive international margins, dependence currency ability pricing in technological policy, to actual supply and technology, related of the of factors vehicle, and a of to Such Dabir on fluctuations and compete acquisitions results of and systems, of success gross and plan fluctuations, profit with levels with applications these new statements revenue, on ability defects, to prior the rate our to our successfully effectively, include, price to quarterly and certain detailed recognition conducting to factors costs intellectual ability benefit appliance, Surfaces, and in The customers, in our industries, Commission information regarding are availability following, breach design fluctuations, without acquired risks Insight from to withstand from to that expense to significant meeting communications to expectations ability chain, and pressure, computer protect manufacturing expenses price the property, customary or small ability of implement our sell probability filings Procoplast on in reductions, business operations, long-term dependence impairment limitation, to and/or two changes, charges, cause new rapid dependence adjustments our incentive including in timing minerals. due based goodwill materials, on in the to launches, number interruptions, cost dependence our divestitures, ability reports. our may such Methode’s performance as and Pacific from Securities customers, income regulations changes the pace and U.S. trade trade of investment ability market programs global raw in successfully commercial and a

A is conference President turn present to this and sir. on over measures. included Additionally, these of would I and release CEO. to Don ahead, you call which the financial will Relations in measures call today’s our like non-GAAP reconciliation earnings go now find both GAAP website. Please Investor Duda, can

Don Duda

half presentation joining we we our second you everyone. ask results, by I segments, To quarter Tsoumas, start, turn discuss commentary for new second XXXX fiscal morning, financial take In Thank for us I first discuss and comments X. our our will questions. good results Slide guidance. highlight Thank Officer. you, Financial our and to your will to updated quarter and Ron afterwards, have morning and and joined conference Ron Both Chief I today call. Michelle today am tariffs review and you this will

and for addition Methode new evolution the the reorganized LED electronically a the this one solutions, lighting have interfaces shop for structure, few to have we With user sensors. Grakon, reflect With of controlled segments integrated reporting becomes years. Methode’s we stop past discussing been

margins. manufacturing and solutions all technology products, Methode additional foster segments complementary drive capabilities the across would which innovation custom and will higher Additionally, unique

the the the of part Dabir now been the included part Products previously while Power the the segment. Medical industrial business Industrial of has is in in in business been up segment. non-automotive best industrial Hetronic, segment. And included segment automotive is and now included in previously mentioned segment, automotive Interface our The in we Grakon’s previously segment As has of Power now is other our eliminated. segment makes Grakon’s Products business in the release,

was been A end, The months eliminated. number other about brief a segment update of both has manufacturing on been Grakon Grakon. a standpoint. with working and product a synergies To from We’ve seen and for X that including from we a sales number areas with the week-long key all Pacific Methode, and businesses meeting across Grakon. with of Hetronic, work can Automotive, just our of and that I teams engineering very Sensors Insight, together. finished pleased

Lighting that and our Ambient especially, Technology displays growth Pacific to solutions, put company along and For engineered products, away with The Technology innovation, capabilities. with focused example, on given customers. through came cultures well best-in-class delivering is our Methode manufacturing Grakon’s Insight’s teams high-quality bringing Sensor belief strong together

so referring only included. are X half review first X results We and Methode’s be of we’ll to Next, X XX, sales. September for weeks Slide on on a quarter and second the acquisition Grakon of of closed

year-over-year first both improved second quarter in half, sales overall recognition, new our operations. European standard of adoption to organically, in accounting revenue part regarding affected sales of tooling which and in decreased sales accounting the While our the the due the

discussed Additionally, we’ve Automotive through by by were X the million previous first customer annual price segment negotiated on impacted the a calls. reduction months, purchase on $XX the we displays in

over for light test reduced demand sales, passenger in periods has emission European console worldwide Automotive shift volumes increased center or the in the partially market driven standards The factors new segment European several business. in vehicle lower the Automotive and of cars. towards improvements the continued harmonized both procedures, car acquisitions implementation offset impacting sales diesels, and which testing by preference SUVs Additionally, were by our

in decreased both sales customer reductions pricing periods. Additionally,

and guidance commentary, XXXX. announced in will the this discuss we aforementioned our have fiscal our as in As headwinds impacted further for his Ron morning release ranges

grow with these Industrial allowed Dabir, increase Grakon, and However, Grakon, a to businesses, headwinds. periods Hetronic lighting, both as sensing, increased our and supply of an mainly continue the the directed due program our sales generation addition value such customers’ but flow impacting Methode ability sales longer to us were despite to the which due LED in and to due has invest significantly Power also on strong improved issue down end-markets, cash and magneto-elastic launch. sales. long-term Interface Product technologies, now provide Automotive to to in

with and is working address supplier issue. aggressively team the the to customer Our

Now $X.XX $X.XX half. please turn quarter, the in to Slide first from earnings $X.XX X. GAAP $X.XX share the and in to decreased per from second to

share year-over-year year. in an expense comparison award even to essentially basis same the months were year, $X.XX and expense, earnings and However, compared quarter lower stock organic in adjusted sales. first $X.XX primarily excluding periods result to $X.XX a as non-GAAP $X.XX X on acquisition-related compared the in both adjusted second this in per amortization The is period of last last flat

adjustment and the EBITDA from and reach of that Adjusted the in EBITDA Please On important threshold earnings the unchanged in long-term quarter $XXX however expenses, cannot purchase X virtually revised consolidated EBITDA quarter this million XX does exclude gross Methode margins. review margins year-over-year mean to recorded That a second a compensation GAAP expense in move higher were level the XXXX. basis, to revision basis in Slide the reflects not XXXX. Therefore, half. gross allows the Slides accounting incentive target management reviewing XXXX be amortization will threshold including the per expense adjustment to for achieve fiscal inventory due we to plan is stock this moving acquisition-related performance acquisitions the from incentive X. level share and to and through the XX, target. for Next, plan of points severance It that of long-term to first second maximum increased note in a in or target.

and reductions. impacted periods addition both non-GAAP periods reductions the adjusted increased partially sales sales the significant second Insight Automotive earlier. lower margins margins to well However, as in and an segment the negatively margins by as purchase grew mainly overall excluding purchase customer price with severance, in mix customer as to sales gross In impacted attributable price Pacific both segment, adjustments margins Automotive accounting Please the segment accounting segment, XX. remained Industrial sales quarter in gross the well Interface significantly the favorable in well Grakon the which Hetronic, in gross and gross periods half. to inventory turn as as offset In both favorable at improvements and were by by carried currently segment, basis first the the impact. unfavorable margins inventory. segment, adjustments by points the by decreased unchanged due periods In the lower Grakon Interface currency I In XX considerably in in sales both improved partially related directed Slide mentioned offset Industrial gross to of issue in as reduced mix and gross margins the decreased a supplier

tailgate an BMW awarded expand Methode. fiscal was integrated few awarded module on potential includes by Dabir, update growth Moving awards other quarter. is $XX wash feature the in to in A with to Average platforms. revenue second in to $X program total this for business the million an was organic automotive European beginning XX-year annual developed million innovative which and new the camera in representing XXXX highlights,

over frame lead average Additional $X.X X with Continental was business annual years. also revenue of awarded million from

annual controller and for the electronic was contains group with battery battery high protection battery X revenue for $X unit voltage components over an battery pack. for disconnect the Titan. a measurement an control, The is power program Average years. disconnect which awarded Our the unit essentially module EV is on/off and million is

sensor. with revenue magneto-elastic Finally, in Asian award for automotive linear sensor. average X-year received $X program utilizes The our million the new annual position

business has vehicle further. high $XX fiscal ago. $XX the create to As deployed the years out business grow which we Slide from you to organic utilizing that and believe year magneto-elastic in potential been seeded organically important can e-bikes margin patented will increase XXXX this with several XX, on point solutions good year is markets to what our fiscal last it’s see million growth million to technology which I for highly commercial automobile,

on Now, Dabir. let’s update an move on with

in During second per we to we revenue. Medical shorter Parkview more time seeing in experiencing the All-in-all, opportunities Hospital added Children’s and revenue new Center Dallas. and lead the are quarter, customers, Indiana quarter two

On evaluations or managed the clinical the XX completed United started, across were evaluation States. front,

In Additionally, incidence systems OR and rate reduce evaluation in at injury Memorial zero. Florida pressure took to-date to place Jackson XX study was Dabir’s the used being largest ICU. with in

Sacramento. in We also Veterans in Administration the department conducted first evaluation clinical our at emergency

completed financial risk study pressure point the front, this post-acute detail Ron, turn ventilator first results XX% will to reported with the zero long-term review guidance. on Dabir’s patients. injury to and reduction on study care from provide month more I on will over last Finally, the call At who high

Ron Tsoumas

and Please Slide good Don to you, turn morning XX. everyone. Thank

the period million in XXXX $XX.X million to GAAP fiscal net same As Don second income the compared year. mentioned for $XX.X was quarter last

million. and by increased $X.X $X.X decreased tax million higher long-term $X.X amortization lower negatively accounting million to Higher GAAP XXXX Insight to and net program was award $X.X expense million. stock increased EBITDA impacted the interest of expense estimate partially million. of related of were These offset adjustments totaling acquisition $X.X And quarter of costs expense for legal purchase and impacts $X.X amortization intangible fiscal $X.X related income increased Second million of the Grakon of revised by of $X.X fees due and incentive million. the acquisitions Pacific income expense asset million

lower revised $X.X of For estimate stock compensation $X.X expense months, higher acquisitions were and acquisition million. $X.X to of amortization interest asset These Insight, to expense million income increased $X.X of the accounting totaling impacts incentive partially expense fiscal and Pacific net Procoplast $X.X intangible amortization million, related tax costs EBITDA of of adjustments affected million program higher million related income legal purchase of $X.X increased of was $X.X of $X.X overall million. the increased the long-term negatively expense by by expense award and $X.X X and lower higher the GAAP Grakon million, fees offset of due million, XXXX million

same the Turning SG&A prior of XX, a XX.X% Slide months our second XX.X% first as last the attention period GAAP year in quarter, in compared XXXX fiscal to sales, the to to percentage in year. and in on XX.X% X was SG&A the compared XX.X%

related tax year to rate X changes X sales The a on award accounting of acquisition-related true-up expense normalize the occur amortization investment XXXX the tax re-measurement same XXXX, was compared last fiscal period to XX.X% programs quarter financial quarter tax XX. XX% review million have This third effective for to rate other stock $X.X for adjusted company in and due However, to This long-term XXXX to year $XX.X and in in was Insight which interpretation year expenses, things differ the program quarter Grakon recording million intangible to Pacific pre-tax capital in XX.X% mainly items Year-over-year, will in guidance. and be reform increased tax year. for first credits. impacts to of Insight, $X.X Procoplast the We of within period, in tax million to A expense percentage due other the few that The the increased amounts in and lower million million XX%. first in non-GAAP second the final SG&A Grakon the we effective compared month primarily in due and in our finalizing to The invested year, to XX.X% adjustments severance, In X prior XX.X%. expense month asset full to amortization and our to any and the adjustments of the will incentive to XX.X% period on as XXXX ‘XX. effective was of fiscal North among X of basis, amortization in which higher for the tax currently reform and the purchase excludes launches fiscal anticipates XXXX months the the fiscal legislative rate a $X.X the acquisitions. X due estimate Europe. in $X.X allotted we months income fiscal Slide acquisitions. support from the and and of period expenditures may to America the range Pacific anticipate second estimated

range. for estimate capital to our expense $XX XXXX investment for $XX for and into amortization to $XX.X was X million the million be to first Expenses continue depreciation We the months, million.

sales. and expect million be between the or to in the $XX XX company the quarter second Slide XX.X% For Shifting million million. full depreciation $XX the $XX.X XXXX, we generated of year EBITDA, fiscal amortization to and

month or For was of $XX EBITDA period, the sales. million X XX.X%

or For $XXX cash million. in and Free to million between fiscal sales million $XXX XXXX, XX.X% quarter second to be range. $XX.X the in we expect XX.X% EBITDA the flow was

free Slide XXXX guidance my fiscal will be $XX off beginning I expect million million. remarks XX. to cash We with and flow between $XX finish on

based of release fiscal have this are upon risks As variety in ranges Forms a guidance the number expectation for involve and uncertainties reminder, been which of and ‘XX morning’s management’s factors regarding a in a XX-Q. detailed

the industry in has headwinds significantly our affected briefly, mentioned Don As automotive business.

compared our European automotive as the Federal car The we impacting key we release to are in have our items our $XXX,XXX of car And is sales automotive due revenues. North our passenger Council XX% also with as Uphold impacted previously, of expected our four negatively initiatives program, end. several Specifically, year costs through American increased this standard European has but impacted volumes international stable discussed there impact while were potential revenues income. An we reduced decrease business year. these seeing also has last turn which to Pacific offsets Lower automotive emission our also and with the customers negatively impacts. the and partially has been which production to at we reduce business related Insight. our have by grant acquisition Asian profitability new to announced lower detailed overall Please this are year Slide operational and passenger improved already negative XX, to items European morning lead-frame tariff.

the XX% X, X value, as Chinese of rising import included products the XXXX. XX% the tariff Grakon’s rate on List potentially The is manufacturer, of products on are tariffs, XXX Regarding current April Section these to tariffs. in import

these to costs new informed that All is on. mandated government been Grakon’s Grakon’s of intention pass it customers have

accept and to morning initially reduce $X.XX this mitigation refused in to sales pretax partially It by months and $X.XX to intangible department As tariffs we is pretax lower $XX.X X.X in of and grant. on the improve the of billion in Methode guidance Grakon to changes. as eliminate which the to operational is Slide updated of profitability, overall the tariffs turn these we $XXX.X income announced important the benefits plans the guidance, of the working procurement Please of expected, impact to million of $X the range its customers acquisition-related future offset these million to note to the share impacts revenue and/or of significant the impact customers. updated as most billion, the range considers have summary, guidance per expenses revenue reduce as to income have In the international earnings initiatives that item. our XX, range Grakon’s of carries $X.XX. in and and income negative to well contribution of asset amortization consolidated to non-cash costs income is

the business. However, flow comments. Don, is that generating strong EBITDA and Grakon my cash concludes

Don Duda

ready we questions. Thank Ron. you, to Michelle, are take

Operator

Thank you.

question Riley We Horn will from session. with conducting of Van now the FBR. Christopher question-and-answer your line proceed Our first a [Operator Instructions] be B. question. comes with Please

Christopher Van Horn

Good morning. taking for call. Thanks my

Don Duda

Chris. morning Good

Christopher Van Horn

So, cost of identified could margin million a if to margin that just that minute look, does exactly – going potential are for initiatives? you or that what translate million does little and a how – profitability, these guidance can are that what into into we and you quantify then have that improve bit be $X.X $X you some opportunity, the the reduce get using did to that

Don Duda

latter Columbia reduced our initiatives manufacturing they at our Nelson, British sales. example really for But Insight. for the site Pacific will an half quarter are and of I that we you more The most And our to implemented because adjusting to have the for affect manufacturing geared part levels probably probably XXXX. fourth already compensate

severance around XXXX has us That later business similar have the that have which in Methode’s taken of the the for par standard quarter, of the in certainly our the mainly into than majority integration our in any not great been lower in that’s there numbers. actions world, plan but and because some Pacific reduced transferred the second Mexico. not with fourth a but detail, factories on adjusting effect, and shouldn’t Insight’s But plants in quarter – quarter to and and They benefit also announced. is little And bit really taking on margins is year, the we there that those but are third not Methode’s go improve in revenue event. margins. We of are we included really and to our manufacturing will automotive and part

Christopher Van Horn

And at China, at or if looking that and have sourcing looking at of you it. Got tariffs, then capacity have? the Okay. shifting you the looked alternative what’s timing

Don Duda

we on Methode Grakon’s about they the have. and manufacturing Absolutely, in have and most China, have of is that have plants around the manufacturing we process the we there, have world of fortunate we past our that in talked we’ve plants sites light most elsewhere.

to are have working Methode again, And that be will tariffs. some move in locations we other the hard So appropriate – manufacturing Egypt. has operations Malta, to in that Mexico, quite actually in as not impacted of by we

ability worked any effect situations we before, but think a they mentioned mitigate the in overnight, So we guidance to the it. plan something tariffs, those they’re we’ll take to and we we but don’t customers. the are we but working necessary long-term tariffs, on, can the happens Ron like for for see is, to as do XX%, our to we’re stay want that customer didn’t some but costs you and we’ve can the do adjustments part while any likely tariff on, mitigate we provide of XX% not the what with XX% for not And making and is have our that. but And it’s most there, working to view have

Christopher Van Horn

your car can America Got or quantify it. passenger quantified And in you you if then could exposure and regions? in other you specifically then Okay. North have

Don Duda

Sure.

business lead-frame business which for transmission car. entire TXX, goes piece have Our is biggest the GM, passenger goes the The transmissions for for we with into passenger cars. of into Continental X-speed

car want been revenue. mentioned Chinese I as significantly affects our Europe, don’t customers, are which them, to affected, name all passenger our then Ron customers, business our has so top that’s as unnecessarily in U.S. that as revenue, affected. And X So well

biggest by then Europe it So by lion’s But being is the and share production is the lead-frame. Chinese Europe; effect and lead-frame; as the of second third, just off well.

Christopher Van Horn

And Okay. for then one last me.

access pipeline you give a the timing, you closed, is like us number that idea mean, customer synergies that Grakon to I look Now to Methode us have. get opportunities that, help you would now that what some to you at just Could a an you is timing that list Grakon could of how closed there’s and mentioned of the product. or give about think revenue when

Don Duda

we The Hetronic Class what would industrial exactly short-term say be our below Grakon play. biggest I is opportunity of getting Ambient and quantify lighting applications, interior when hard distribution into have is ‘XX, look synergy. It’s they a Insight’s bringing because see Long-term point. with and the long-term, various with the some Lighting ‘XX, into moving we of that’s into at system this Xs products to short-term that when at this Pacific for

helpful. very be will it think I

next center we incandescent quite change something lighting a Our in vehicle will again year. year, touchscreen to there but as revamp that’s still Lighting is not the attractive develop and Grakon’s bit in they that’s is the know council a see wholesale and cabs, not of the of to interiors our that may we that see that capabilities customers, because the we next cab. will

we we really speak with the see to LEDs, it’s can – an soon tariffs with replace any So, and point short-term I as too What revenue but it will issue. bringing Grakon major weren’t really opportunity. to is to if

Grakon factory not always up a looking manufacturing, just we going Chinese LEDs. bad. anticipate of there. buy our working LEDs, which Methode lot a savings cost is looking buy is This are we We now at we are under to It’s of as is also be then not we There at of lot Methode standards. operation. savings bit they procurement, do from quite Grakon’s to And a

the usual the is did items and Ron, at anything? with looking also Pacific are same and present then in there copper Insight. we We

Ron Tsoumas

gain the traction that could the very we piece procurement quickly. on No, is

Christopher Van Horn

the great. so guys. Okay, hop in will Thanks back much, I queue.

Don Duda

Thanks, Alright. Chris.

Operator

you. Thank

comes question your with Please next proceed the Baird. with line from Our question. of Leiker David

David Leiker

Good morning, everyone.

Don Duda

Good morning David.

David Leiker

Couple it I growth been revenue have on looks there moment. about you is in what pretty talk Grakon the like think looks meaningful for like acceleration here forward that things. contract longer outlook going bit and like? bookings of what Can and stay a a you awards, a term

Don Duda

just the did that. remains several review We months. from Okay. a of It robust very last

but X Now, I some fall. that know orders wouldn’t X Class X I and project, up are have order Class say, decreased, a the customers study to continue study, increased

was you up see what in classes XX Class X of So week and we over forecasts. and right our in bit, a Class vehicles. saw last we last other the going really months customer down but little And filings little that’s are upturn X the maybe by the the now, result

David Leiker

that’s there ability Grakon, you at us the growth what end how some at do to or doing? it – Is relative market have of looked revenue your to you performing characterization have is the give

Don Duda

do great slightly you detail, they are market. outperforming know give that can’t We – but the the outperforming

areas, some And expanded test, it that, got so now industrial that from other to grow into I again some test automotive. we lighting, into have they their is but would our love of have of put into they

– with from from are are they in probably tracks I they So their think and initiatives their fact Class other know other on ahead. we par X

David Leiker

uncertainty you to And of side the equation, do? some structural blocking in some know that necessarily you weaker automotive of not kind on of changes Yes. how actions the context And do are of of address talked about that volatility of of I so side the versus particularly and this of tackling the this, it’s much volumes, then work think the I taking there. business, want some these that to are need the tariff you you

Don Duda

don’t I wholesale think restructuring. we have Well, do to

spend but through would without went action talk revenue adjusting Automotive I pointed mean but announced we the took take. around it’s rate But maintain having our to the world, that, similar a margins. we our there’s reduced that David we manufacturing a take would to the will we be to Nelson I usual And that and in lot to difficult items the that. they actions supplier about So are

David Leiker

here most in last just to with you. of part went being earnings are part if that that, kind We impacting few that, things are, WLTP QX that, calendar there lot macro numbers, earnings, you that of is Automotive anything Is a with? then QX not of of passenger cars on of seeing all China being suppliers seems And more issues pulling a are not a one that that’s part covered It being of beyond we a thing. those that. by dealing

Don Duda

I If we exclude tariffs, that think detailed Ron fairly well.

David Leiker

Okay.

Don Duda

are downturn here This very on offset enough it’s pleased while X those Europe when was Automotive European dramatic was SUV we weeks changed But other truck get. X-week for in releases we’re not our in we last that we to – and outlook – And ago a have wouldn’t in really and saw the the America, in we and that reductions.

David Leiker

rates But go the build – ahead.

Don Duda

talked there we that about. items No, other haven’t are no

it detailed very Ron think I well.

David Leiker

bit, that to liking I most seem But still would see you’re of little to be the build rates starting of though? some in back, Europe a manufacturers somewhere they’re presume the coming for

Don Duda

releases it, because seen seen anticipate, a in because have We models. and our it little than we half in volatile. but it Europe haven’t hesitant haven’t really may say I’m we our we customers’ better to forecasting seen we hesitant I’m orders. has been second in see always

David Leiker

EBITDA. the EBITDA fiscal you put right it’s ‘XX then in and about way you be Is do out math that, that? Okay. a a and the for that your we then on increase in looking item, [ph] XX% at there threshold number estimate and EBITDA last XX% in And talk have ‘XX if or you that the to the for XXXX,

Don Duda

includes it to all the ‘XX as fiscal from well that sitting is and our state business And Yes. occur call adjustment ‘XX at XXXX. [ph] EBITDA $XXX of million here year-over-year performance $XXX one-time we units as target, fiscal our events year we LTIP – that’s our Plan, anticipate anticipated I to fiscal plan book – the the for with for ongoing to million now. least

David Leiker

are And incentive get at that you on is assumes where that that level comp to accrual, you number? a the

Don Duda

– target, at million is are We at – incentive us that to to rate which least comp target, which gives is $XXX accrual million. $XXX

David Leiker

Okay.

Ron Tsoumas

In my that. Methode achieve prepared remarks, than higher can

Don Duda

Right.

David Leiker

Right.

Ron Tsoumas

The $XXX at plan it of tops million.

Don Duda

that an confident. at based it’s least XX% on again, requirement and And be Ron I’d accounting

Ron Tsoumas

that a at already. the David as of So XXXX XXXX increase way XXXX contemplated have say to our estimate, the target up amortization good numbers it on to been of maybe already and that impact in fiscal looking

So number. all of that is contemplated in fiscal the XXXX

David Leiker

thought, correctly. to I wanted Thank sure I understand you Okay. make very That’s much. just I why it

Don Duda

Thank you, David.

Operator

you. Our Please Craig-Hallum. Steve from line your proceed Instructions] question. Dyer with comes Thank the with [Operator question next of

Ryan Sigdahl

guys. Hi, on for Steve Sigdahl Ryan Dyer.

Don Duda

Ryan. Hi,

Ryan Sigdahl

one on there. on Is EBITDA a that an adjusted on GAAP is basis last or clarification that guys you question basis? Maybe and that EPS the provided guidance

Don Duda

GAAP.

Ryan Sigdahl

of is that year presumably that lot just year, growth was in XX% reoccur won’t So mentioned next correct? that EBITDA is that adjustments this

Don Duda

Yes.

Ron Tsoumas

one-timer ‘XX correct. Fiscal is

Ryan Sigdahl

Okay, to Grakon get there? it thank to its you. then margins do And and will how inventory to long relates back turn gross it as you normalize think take

Ron Tsoumas

inventory Methode’s lean down, we out but… the Well, your have question They inventory. our with inventory on too manufacturing systems factories and much can answer I and will to get ability

Don Duda

inventory You value running up are an referring year. current through and accounting that’s purchase step from to this fiscal the from the

Ryan Sigdahl

Yes, is three? sort that of

Ron Tsoumas

million be that $X.X the second we up anticipate quarter will thereabouts believe and in another had maybe I this we done. million of $X quarter then step and

the in inventory purchase be of any done third the quarter. impact So, accounting will to

Ryan Sigdahl

Alright, thank expansion then from segment clarification, are big and that they power what then plans in are and what hearing And rail be customer data you terms of its customer in another and you. what will thinking? maybe

Don Duda

have and we industrial. stayed complete the I this moment. robust increase orders not at will their far happened in see that And and say are It the and we will months capacity X to the would has as as they the where XX customer but seeing in low, past not we be had will then of

Ryan Sigdahl

Okay, last one for me.

tariff prepared right you can you that not caught on I if those to remarks, think costs, willing been accept Grakon negotiations… I have of customers mentioned in elaborate it your pass-through

Don Duda

heated customers, polite a through is discussion. it If not different automotive work a on we negotiation are our sooner get And that. compromise. That no are or were not It’s we it talking we will it with later let’s call paying copper paying that, for no affected be a increases. will we it’s than to and the we always price for always customer Detroit

are alternatives, normal business. it. really didn’t they out with again would dig they their you call want in stress dealing an acquisition, And And course will to I we have have if we before have of Methode Grakon that’s customers. I to with alternative, take where So right,

it, is ability the can and who to yes, at least a to pay but how going we we is argue mitigate show we to hey, have plan, We for go least customers this. at here them over can

So, that’s Grakon and a big advantage the customers. to Grakon

Ryan Sigdahl

good it luck. Thanks, Good. I guys will and leave there.

Don Duda

Thank you.

Operator

Mr. time. further at like to no back call Duda are any for closing over turn this questions the remarks. There you. Thank I would to

Don Duda

Thank you, Michele.

We will calling season wish and very everyone pleasant Take holiday thank in. a safe and for care. you

Operator

you. This concludes today’s teleconference. Thank

a day. wonderful disconnect your this may You and for have participation your lines at you Thank time.

Methode Electronics (MEI) 6 Dec 182019 Q2 Earnings call transcript