Methode Electronics Stock

Methode Electronics, Inc. operates as a leading global supplier of custom engineered solutions with sales, engineering and manufacturing locations in North America, Europe, the Middle East and Asia. The company designs, engineers and produces mechatronic products for original equipment manufacturers (OEMs) utilizing its broad range of technologies for user interface, light-emitting diode (LED) lighting system, power distribution and sensor applications.

The company’s solutions are found in the end markets of transportation (including automotive, commercial vehicle, e-bike, aerospace, bus and rail), cloud computing infrastructure, construction equipment, consumer appliance and medical devices.

On April 20, 2023, the company acquired 92.2% of Nordic Lights Group Corporation (Nordic Lights). Nordic Lights is a premium provider of high-quality lighting solutions for heavy duty equipment and a public limited liability company incorporated in Finland with its shares admitted to trading on Nasdaq First North. The acquisition complements the company’s own existing LED lighting solutions. In addition, the business aligns well with the company’s inorganic growth framework given its focus on engineered solutions for OEMs, its industrial and non-auto transportation market exposure, and its customer and geographic diversity. From May 1, 2023 to June 16, 2023, the company acquired an additional 7.2% of Nordic Lights.

Segments

The company operates through four segments: Automotive, Industrial, Interface and Medical.

The Automotive segment supplies electronic and electro-mechanical devices and related products to automobile OEMs, either directly or through their tiered suppliers. The company’s products include integrated center consoles, hidden switches, ergonomic switches, transmission lead-frames, complex insert molded solutions, LED-based lighting solutions, and sensors which incorporate magneto-elastic sensing, eddy current or other sensing technologies that monitor the operation or status of a component or system.

The Industrial segment manufactures external lighting solutions, including driving, work, and signal lights, industrial safety radio remote controls, braided flexible cables, current-carrying laminated and powder-coated busbars, high-voltage high current connector and contracts, custom power-product assemblies, such as its PowerRail solution, high-current low-voltage flexible power cabling systems that are used in various markets and applications, including aerospace, cloud computing, commercial vehicles, construction equipment, industrial, military, power conversion and transportation.

The Interface segment provides a variety of copper-based transceivers and related accessories for the cloud computing hardware equipment and telecommunications broadband equipment markets, user interface solutions for the appliance, commercial food service, and point-of-sale equipment markets, and fluid-level sensors for the marine/recreational vehicle and sump pump markets.

The Medical segment is made up of the company’s medical device business, Dabir Surfaces, Inc. (Dabir Surfaces), its surface support technology aimed at pressure injury prevention. Dabir Surfaces has developed the technology for use by patients who are immobilized or otherwise at risk for pressure injuries, including patients undergoing long-duration surgical procedures.

Intellectual Property

The company generally relies on patents, trade secrets, trademarks, licenses, and non-disclosure agreements to protect its intellectual property and proprietary products. The company has been granted a number of patents in the U.S., Europe and Asia and have additional domestic and international patent applications pending related to its products. The company’s existing patents expire on various dates between 2023 and 2043.

Seasonality

A significant portion of the company’s business is dependent upon the automotive and commercial vehicle industries.

Major Customers

During fiscal 2023, the company’s five largest customers accounted for approximately 49% of its consolidated net sales. Two customers in the Automotive segment represented more than 10% of itsconsolidated net sales at 18.7% and 10.8%. In general, these sales were for component parts used in particular vehicle models. Typically, the company’s supply arrangement for each component part includes a blanket purchase order and production releases. In general, a blanket purchase order is issued for each part as identified by the customer part number. Each blanket purchase order includes standard terms and conditions, including price. In certain circumstances, we supply the requirements for a particular customer vehicle model for the life of the model, which can vary from three to seven years. The company’s customers order parts using production releases approved under the relevant blanket purchase order. The production releases include information regarding part quantities and delivery specifications.

Research and Development

The company’s research and development costs were $35.0 million for the year ended April 29, 2023.

History

Methode Electronics, Inc. was founded in 1946. The company was incorporated in 1946 as an Illinois corporation and was reincorporated in Delaware in 1966.