Methode Electronics (“Methode”)(NYSE: MEI), a Chicago-based designer and manufacturer of electro-mechanical devices, announced that it recorded profits of $4.1 million, or $0.11 per share, for the first quarter of fiscal 2011.
First quarter revenues increased 9.5% on a year-over-year basis to $98.3 million. The situation is a vast improvement over a year ago when the company only covered its costs but still fell short of the consensus estimate of $0.15 earnings per diluted share.
The company expressed that its Automotive segment is still feeling the repercussions from the termination of its contract with Delphi Automotive Systems (“Delphi”).
Methode’s shares plunged 15% to trade at $7.98 as of 12:36 pm ET after missing analyst estimates.
On September 4, 2008, Methode and Delphi entered into a supply agreement that required Methode to supply seat bladders used in Delphi’s occupant restraint system for approximately three years. A year later, Delphi terminated the contract, sparking a law suit battle between the two companies.
As a result of the terminated contract, sales for Methode’s Automotive segment decreased 3.7% to post income before taxes (EBT) of $2.8 million in the first quarter of fiscal 2011.
The company’s Interconnect and Power Products segments were unaffected by the legal battle, both increasing revenues by 40% and 2.7%, respectively. The Interconnect segment recorded an EBT of $3.7 million while the Power Products segment posted an EBT of $0.1 million.
Methode also announced that its MDI business unit was recently awarded a contract to provide customized sensors to a major automotive original equipment manufacturer. The contract is worth approximately $32 million in revenue over five years and is likely to gain additional volume, the company said.
Disclosure: no position