SAN DIEGO, Sept. 13, 2024 (GLOBE NEWSWIRE) -- A class action lawsuit has been filed on behalf of purchasers or acquirers of Methode Electronics, Inc. (: MEI) (“Methode” or the “Company”) securities between June 23, 2022 and March 6, 2024, inclusive (the “Class Period”), charging the Company and certain of its former senior executives with violations of the federal securities laws (collectively, “Defendants”).
Methode investors have until October 25, 2024 to seek appointment as lead plaintiff of the Methode class action lawsuit.
If you purchased or otherwise acquired Methode securities between June 23, 2022 and March 6, 2024, and suffered substantial losses, and you wish to obtain additional information or serve as lead plaintiff in this lawsuit, you may submit your information and contact us here: https://dicellolevitt.com/securities/methode-electronics/.
You can also contact DiCello Levitt attorneys Brian O’Mara or Hani Farah by calling (888) 287-9005 or at [email protected]. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased or acquired.
No Class Has Been Certified. Until a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice.
Case Allegations
Methode designs, engineers, and manufactures custom-engineered solutions for Original Equipment Manufacturers (“OEMs”). The Company’s products are found in the end markets of transportation, cloud computing infrastructure, construction equipment, consumer appliances, and medical devices.
Historically, a contract to produce center consoles in vehicles for General Motors (“GM”) provided the Company with substantial revenues. For example, in 2016, sales to GM represented approximately 50% of the Company’s net sales. However, by 2020, Methode began transitioning away from its reliance on traditional center stack units due to changes in automotive trends. While the change would initially result in lower unit sales, Defendants asserted that lost sales would be offset by higher margins on the more specialized components sold by the Company, as well as other contract awards in the electric vehicle (“EV”) space. Defendants also told investors the new strategy would benefit the Company because it allowed Methode to diversify away from its dependence on GM. For example, in June 2022 Defendants told investors “our business model is not just healthy, but [i]s prospering from the strategic step that we have taken to grow the business.”
However, unbeknownst to investors, Defendants’ statements were false and misleading. In truth: (1) the Company had lost highly skilled and experienced employees during the COVID-19 pandemic that were necessary to successfully complete the Company’s business transition; (2) Methode’s attempts to replace its GM center console production had been plagued by production planning deficiencies, inventory shortages, vendor and supplier problems, and poor execution; (3) the Company’s manufacturing systems at a critical production facility suffered from a variety of logistical defects; and (4) the Company had fallen substantially behind on the launch of new EV programs, preventing Methode from timely receiving revenue from new EV program awards.
The truth began to be revealed in March 2023, when a series of poor earnings announcements revealed the poor financial state of the Company. In March 2024 investors learned the extent of Methode’s business turmoil when the Company reported an $11 million loss from operations, withdrew all prior guidance, and disclosed it was taking drastic measures to reduce expenses, such as selling non-critical assets. These disclosures caused the Company’s stock price to decline dramatically. The Company’s stock price currently hovers around $10 per share, more than 80% below its Class Period high.
Notably, several of the Company’s executives departed close to the end or after the Class Period, including Methode’s Chief Operating Officer, Chief Financial Officer, and two different Chief Executive Officers, with the second one lasting just three months.
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