공지 • Oct 08
Kessler Topaz Meltzer & Check, LLP Files A Securities Fraud Class Action Lawsuit Against Methode Electronics, Inc
Kessler Topaz Meltzer & Check, LLP informed investors that the firm has filed a securities fraud class action lawsuit against Methode Electronics, Inc. (Company) on behalf of investors who purchased or acquired Methode common stock between December 2, 2021, and March 6, 2024, inclusive (Class Period). The action, captioned City of Cape Coral Municipal General Employees’ Retirement Plan v. Methode Electronics, Inc., et al., Case No. 1:24-cv-09654 (Cape Coral Action), was filed in the United States District Court for the Northern District of Illinois. The Class Period begins on December 2, 2021, when Methode filed its second quarter 2022 financial results. In connection with these results, Defendant Donald W. Duda, the Company’s then-President and Chief Executive Officer, touted the “diversity of awards across key applications” and that “business awards over the last couple of years have put on track in aggregate to replace the sales from the roll off of this truck [center console] program.” In fact, Defendant Duda also explained to investors during the Company’s investor earnings call that Methode “expect[s] that . . . as that [center console program] rolls off and other programs roll on, that our margins would improve.” . Throughout the Class Period, Defendants repeatedly assured investors that Methode’s Automotive segment was growing and acquiring new business, but failed to disclose that Methode could not adequately meet its customers’ needs because the Company was saddled by operational inefficiencies in North America, including planning deficiencies, inventory shortages, and shipping delays. Investors began to learn the truth about the significant problems in Methode’s Automotive segment on March 9, 2023, when the Company announced its third quarter fiscal year 2023 financial results. Methode reported that its overall quarterly net sales decreased nearly 4% year-over-year, which was largely driven by a nearly 10% decline in quarterly Automotive net sales. Methode also cut its fiscal year 2023 net sales and diluted earnings per share (“EPS”) guidance. On this news, the price of Methode common stock declined $6.25 per share, or more than 13% over multiple trading sessions, from a close of $47.61 per share on March 8, 2023, to close at $41.36 per share on March 13, 2023. On June 12, 2023, Methode preliminarily announced its fourth quarter and full fiscal year 2023 financial results. Methode revealed that it expected, inter alia, full fiscal year diluted EPS in the range between $2.10 per share and $2.14 per share, which was well-below Methode’s revised profitability guidance announced the prior quarter. On this news, the price of Methode common stock plummeted $8.17 per share, or more than 18%, from a close of $45.07 per share on June 12, 2023, to close at $36.90 per share on June 13, 2023. Ten days later, on June 22, 2023, Methode reported its fourth quarter and full fiscal year 2023 financial results, including full fiscal year diluted EPS of $2.10 per share, at the bottom of its guidance range. On this news, the price of Methode common stock declined $4.75 per share, or nearly 13% over multiple trading sessions, from a close of $37.52 per share on June 21, 2023, to close at $32.77 per share on June 23, 2023. Over the next several months, Methode made several additional partial revelations about the Company’s operational inefficiencies, while also assuring investors that it was swiftly addressing such issues and that a corrective action plan was in place. Then, on December 7, 2023, Methode reported its second quarter fiscal year 2024 financial results, including a goodwill impairment of $56.5 million in its North American and European Automotive segments. Methode further reported a year-over-year decrease in net sales and a quarterly loss from operations due to the goodwill impairment resulting from operational inefficiencies in its Automotive segment. Methode also revealed that it terminated the employment of the Company’s then-Chief Operating Officer, Defendant Joseph Khoury, who had been placed on leave in July 2023. On this news, the price of Methode common stock declined $2.26 per share, or more than 9%, from a close of $24.39 per share on December 6, 2023, to close at $22.13 per share on December 7, 2023. Finally, investors learned the full extent of Methode’s operational challenges on March 7, 2024, when the Company reported its third quarter fiscal year 2024 financial results. Critically, on Methode’s investor earnings call held that same day, Avinash Avula, the Company’s then-President and Chief Executive Officer, revealed a “$21 million year-over-year” decrease in Methode’s quarterly net sales due to continued operational inefficiencies within the Automotive segment. Methode also suspended its financial guidance for fiscal years 2024 and 2025 and stated that “[a]ny and all previous guidance provided by the company should no longer be relied upon.” On this news, the price of Methode common stock declined $6.55 per share, or more than 31%, from a close of $21.04 per share on March 6, 2024, to close at $14.49 per share on March 7, 2024.