Investigations
Methode Electronics, Inc.
Overview
Overview
- Deadline:
- Oct 25, 2024
| Company Name: | Company Name: Methode Electronics, Inc. |
| Stock Symbol: | Stock Symbol: MEI |
Methode Electronics, Inc. (NYSE: MEI): Methode Electronics, Inc. (“Methode” or the “Company”) has been sued for violations of the federal securities laws. The complaint asserts claims against the Company and certain of its senior executives under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of investors in Methode common stock between June 23, 2022 and March 6, 2024, inclusive. The case is pending in the U.S. District Court for the Northern District of Illinois and is captioned Salem v. Methode Electronics, Inc., et al., No. 24-cv-07696.
If you incurred losses on your investments in Methode, you are encouraged to submit your information.
Why was Methode Sued for Securities Fraud?
Methode designs, engineers, and manufactures custom-engineered solutions for automotive original equipment manufacturers. Historically, the Company generated a significant portion of its revenue from selling a high volume of integrated center consoles for use in General Motors vehicles. Starting around 2020, Methode began to transition away from its traditional business and shifted to a low volume production of more specialized components for a wider variety of vehicle manufacturers, in particular manufacturers of electric vehicles.
The complaint alleges that during the relevant period, Methode misrepresented the success of the Company’s transition from the General Motors console program to new electric vehicle applications. The complaint also alleges that Methode assured investors that the Company’s “higher-margin product mix” would “offset” any decline in income from the General Motors program.
As alleged, these statements were materially false and misleading. In truth, Methode’s transition to electric vehicles had been plagued with operational, logistical, and personnel challenges that negatively impacted the Company’s business. This included major setbacks during the transition caused by personnel turnover in the wake of the COVID-19 pandemic, poor operational decisions, vendor issues, and supplier changes that had led to production planning deficiencies, inventory shortages, and, ultimately, botched execution of the Company’s strategic plans.
The Stock Declines as the Truth is Revealed
On September 7, 2023, Methode announced financial results for 1Q 24. The Company disclosed that “operational inefficiencies” in the Company’s North American operations had negatively impacted earnings for the quarter and were expected to linger into the second quarter. The operational issues included both labor and vendor problems, which led to planning deficiencies, inventory shortages, unrecoverable spot purchases, premium freight, and delayed shipments. On this news, the price of Methode stock declined by $6.67 per share, or over 22%, to close at $23.33 per share on September 7, 2023.
On December 7, 2023, Methode announced financial results for 2Q 24. During the quarter, the Company’s Automotive Segment generated only $154.3 million in net sales and suffered a $61.5 million loss from operations. The Company also disclosed a $56.5 million goodwill impairment in the Company’s North American and European Automotive Reporting Units. On this news, the price of Methode stock declined by $2.87 per share, or almost 12%, to close at $21.52 per share on December 8, 2023.
On March 7, 2024, Methode announced financial results for 3Q 24 and withdrew all prior guidance. The Company also announced it was taking urgent actions to reduce costs, such as by reducing headcount and discretionary expenses and by disposing of non-critical assets. On this news, the price of Methode stock declined by $6.55 per share, or over 31%, to close at $14.49 per share on March 7, 2024.
Finally, on April 8, 2024, Methode announced that its CFO would be retiring from the Company effective July 12, 2024. Less than one month later, on May 6, 2024, Methode announced that the CEO had resigned just three months into his tenure.
What are my Rights?
If you purchased or otherwise acquired Methode securities between June 23, 2022 and March 6, 2024, inclusive you may ask the Court no later than October 25, 2024, which is the first business day after 60 days from the date of the publication of notice of pendency of the action, to appoint you as Lead Plaintiff through counsel of your choice. To be a member of the Class, you need not take any action at this time. The ability to share in any potential future recovery is not dependent on serving as Lead Plaintiff.
If you incurred losses on your investments in Methode, you are encouraged to submit your information.
You can also contact:
Ross Shikowitz
ross@bfalaw.com
212-789-3619
All representation is on a contingency fee basis. Shareholders are not responsible for any court costs or expenses of litigation. The Firm will seek court approval for any potential fees and expenses.
Why Bleichmar Fonti & Auld LLP?
BFA is a leading international law firm representing plaintiffs in securities class actions and shareholder litigation. It was named among the Top 5 plaintiff law firms by ISS SCAS in 2023 and its attorneys have been named Titans of the Plaintiffs’ Bar by Law360 and SuperLawyers by Thompson Reuters. Among its recent notable successes, BFA recovered over $900 million in value from Tesla, Inc.’s Board of Directors (pending court approval), as well as $420 million from Teva Pharmaceutical Ind. Ltd.
Attorney advertising. Past results do not guarantee future outcomes.
If you incurred losses on your investments in Methode, you are encouraged to submit your information.
Why was Methode Sued for Securities Fraud?
Methode designs, engineers, and manufactures custom-engineered solutions for automotive original equipment manufacturers. Historically, the Company generated a significant portion of its revenue from selling a high volume of integrated center consoles for use in General Motors vehicles. Starting around 2020, Methode began to transition away from its traditional business and shifted to a low volume production of more specialized components for a wider variety of vehicle manufacturers, in particular manufacturers of electric vehicles.
The complaint alleges that during the relevant period, Methode misrepresented the success of the Company’s transition from the General Motors console program to new electric vehicle applications. The complaint also alleges that Methode assured investors that the Company’s “higher-margin product mix” would “offset” any decline in income from the General Motors program.
As alleged, these statements were materially false and misleading. In truth, Methode’s transition to electric vehicles had been plagued with operational, logistical, and personnel challenges that negatively impacted the Company’s business. This included major setbacks during the transition caused by personnel turnover in the wake of the COVID-19 pandemic, poor operational decisions, vendor issues, and supplier changes that had led to production planning deficiencies, inventory shortages, and, ultimately, botched execution of the Company’s strategic plans.
The Stock Declines as the Truth is Revealed
On September 7, 2023, Methode announced financial results for 1Q 24. The Company disclosed that “operational inefficiencies” in the Company’s North American operations had negatively impacted earnings for the quarter and were expected to linger into the second quarter. The operational issues included both labor and vendor problems, which led to planning deficiencies, inventory shortages, unrecoverable spot purchases, premium freight, and delayed shipments. On this news, the price of Methode stock declined by $6.67 per share, or over 22%, to close at $23.33 per share on September 7, 2023.
On December 7, 2023, Methode announced financial results for 2Q 24. During the quarter, the Company’s Automotive Segment generated only $154.3 million in net sales and suffered a $61.5 million loss from operations. The Company also disclosed a $56.5 million goodwill impairment in the Company’s North American and European Automotive Reporting Units. On this news, the price of Methode stock declined by $2.87 per share, or almost 12%, to close at $21.52 per share on December 8, 2023.
On March 7, 2024, Methode announced financial results for 3Q 24 and withdrew all prior guidance. The Company also announced it was taking urgent actions to reduce costs, such as by reducing headcount and discretionary expenses and by disposing of non-critical assets. On this news, the price of Methode stock declined by $6.55 per share, or over 31%, to close at $14.49 per share on March 7, 2024.
Finally, on April 8, 2024, Methode announced that its CFO would be retiring from the Company effective July 12, 2024. Less than one month later, on May 6, 2024, Methode announced that the CEO had resigned just three months into his tenure.
What are my Rights?
If you purchased or otherwise acquired Methode securities between June 23, 2022 and March 6, 2024, inclusive you may ask the Court no later than October 25, 2024, which is the first business day after 60 days from the date of the publication of notice of pendency of the action, to appoint you as Lead Plaintiff through counsel of your choice. To be a member of the Class, you need not take any action at this time. The ability to share in any potential future recovery is not dependent on serving as Lead Plaintiff.
If you incurred losses on your investments in Methode, you are encouraged to submit your information.
You can also contact:
Ross Shikowitz
ross@bfalaw.com
212-789-3619
All representation is on a contingency fee basis. Shareholders are not responsible for any court costs or expenses of litigation. The Firm will seek court approval for any potential fees and expenses.
Why Bleichmar Fonti & Auld LLP?
BFA is a leading international law firm representing plaintiffs in securities class actions and shareholder litigation. It was named among the Top 5 plaintiff law firms by ISS SCAS in 2023 and its attorneys have been named Titans of the Plaintiffs’ Bar by Law360 and SuperLawyers by Thompson Reuters. Among its recent notable successes, BFA recovered over $900 million in value from Tesla, Inc.’s Board of Directors (pending court approval), as well as $420 million from Teva Pharmaceutical Ind. Ltd.
Attorney advertising. Past results do not guarantee future outcomes.