Baird’s 2019 Global Industrial Conference
November 5, 2019
Don Duda, CEO Ron Tsoumas, CFO Mark Shermetaro, VP Corporate Development
Bairds 2019 Global Industrial Conference November 5, 2019 Don Duda, - - PowerPoint PPT Presentation
Bairds 2019 Global Industrial Conference November 5, 2019 Don Duda, CEO Ron Tsoumas, CFO Mark Shermetaro, VP Corporate Development This presentation contains certain forward-looking statements, which reflect management's expectations
Don Duda, CEO Ron Tsoumas, CFO Mark Shermetaro, VP Corporate Development
This presentation contains certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are subject to the safe harbor protection provided under the securities laws. Methode undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in Methode's expectations on a quarterly basis or otherwise. The forward-looking statements in this presentation involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in Methode's filings with the Securities and Exchange Commission. Such factors may include, without limitation, the following: (1) dependence on a small number of large customers, including two large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and communications industries; (3) international trade disputes resulting in tariffs and our ability to mitigate tariffs: (4) timing, quality and cost of new program launches; (5) ability to withstand price pressure, including pricing reductions; (6) ability to successfully market and sell Dabir Surfaces products; (7) currency fluctuations; (8) customary risks related to conducting global operations; (9) ability to withstand business interruptions; (10) recognition of goodwill impairment charges; (11) ability to successfully benefit from acquisitions and divestitures; (12) investment in programs prior to the recognition of revenue; (13) dependence on the availability and price of materials; (14) fluctuations in our gross margins; (15) dependence on our supply chain; (16) income tax rate fluctuations; (17) ability to keep pace with rapid technological changes; (18) breach of our information technology systems; (19) ability to avoid design or manufacturing defects; (20) ability to compete effectively; (21) ability to protect our intellectual property; (22) success of Grakon and/or our ability to implement and profit from new applications of the acquired technology; (23) significant adjustments to expense based on the probability of meeting certain performance levels in our long-term incentive plan; and (24) costs and expenses due to regulations regarding conflict minerals.
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Automotive 69% Industrial 26% Medical Device Interface 5%
10-year revenue growth CAGR
10-year EBITDA growth CAGR
North America 68% Europe 23% Asia 9%
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TECHNOLOGY ENGINEERING MANUFACTURING
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AUTOMOTIVE INTERIOR
Headlamp Switches Steering Wheel Switches Window Switches Touchpads Rear Seat Controls Overhead Consoles Touchscreens Center-stacks Center Console Switches Smart Knobs Rotary Position Sensor
AUTOMOTIVE EXTERIOR
Gesture/Touch Tailgate Emblem Integrated Tailgate Module Advanced Illumination In-glass Messaging Keyless Entry Handle-free Door Solution Side Mirror Projection Anti-roll Stability Sensor Smart Towing Sensor Transmission Position Sensor
LIGHTING
Sill Plates Flood Lighting Ambient Lighting Material Illumination Reading / Dome Lamps Seat Illumination Full Color Spectrum Holographic Lighting
ELECTRIC VEHICLE
Intelligent Battery Connection Battery Bus Bar Connections Battery Disconnect Unit PowerBud Connectors Insert Molded Bus-bar/Carriers Powder Coated Bus Bar Flexible Bus Bar Laminated Bus Bar J1772 Charging Connector
COMPLEX INSERT MOLDED
Transmission Controller (Lead Frame) Engine Control Units Ignition Switch Anti-Lock Braking Assemblies Pedal Assemblies Door Latch Actuator Horn Contact Unit Transmission Solenoid Connector
Electric SUV
$228
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Ford Explorer
$75
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Automotive Industry Volumes Versus Methode’s Automotive Sales
8.0% 17.1%
0% 5% 10% 15% 20%
CY Q2 19 MEI Q1 FY20* Global NA Europe China
*Excludes impact of currency
+ Source, Ward’s, JD Power, ACEA
pickup trucks in NA
automotive OEMs
car slowdown and price downs
should further help offset headwinds
+
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Headlamp / Fog / DRL Lighting Rear Lighting RGB Ambient Lighting Interior Task Lighting Storage Lighting Safety Lighting Signal / Marker Lighting Work / Task Lighting Lighting Control Modules Wireless Control and Feedback Wireless Video Feedback Rf Proximity Detection Integrated Controller and Remote Control For Locomotives Rf E-stop Weight Sensor (Magneto-elastic) Electromechanical and Remote Control Retrofit Kits Batteries and Chargers Accessories (Straps, Belts, Vests, Etc.) Bus Bar Solutions Power Connectors Power Assemblies Power Cable Solutions Thermal Solutions PowerBud Connectors Open Compute Connector PowerRail
FLUID LEVEL SENSING
Sump Pump Switch Bilge Pump Switch Sewage Level Switch RV Tank Level and Monitor Marine High Water Alarm Battery Electrolyte Level Sensor
ICS With Touch Controls ICS With Touchscreen Multimedia Controller Overhead Console Integrated Tailgate Module Pressure Injury Prevention Overlay
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Controller Interconnect
Dabir Surgical System Dabir Gen2 Controller
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LONTZEN, BELGIUM SHANGHAI, CHINA 195,000 Sq Ft 566 Employees FRESNILLO, MEXICO 120,000 Sq Ft 930 Workers NASR, EGYPT 121,000 Sq FT 530 Employees MRIEHEL, MALTA 299,000 Sq Ft 1,330 Employees MONTERREY, MEXICO 287,000 Sq Ft 1,180 Employees and 128,000 Sq Ft 830 Employees DONGGUAN, CHINA 197,000 Sq Ft 950 Employees CHICAGO, IL ONTARIO, CANADA 35,000 Sq Ft 110 Employees
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In CHICAGO:
Harwood Heights – Dabir 40,000 Sq Ft 55 Employees Rolling Meadows – PSG 52,000 Sq Ft 140 Employees OKLAHOMA CITY,OK 155,000 Sq Ft 110 Employees
*CHICAGO, IL* SEATTLE, WASHINGTON SAN JOSE, CALIFORNIA DETROIT, MICHIGAN NELSON, CANADA OKLAHOMA CITY, OK BURNLEY, U.K. MRIEHEL, MALTA GAU-ALGESHEIM & MUNICH, GERMANY BEIRUT, LEBANON SHANGHAI, CHINA BANGALORE, INDIA TOKYO, JAPAN SHENZEN, CHINA
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* In CHICAGO, IL: HARWOOD HEIGHTS ROLLING MEADOWS
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AUTOMOTIVE INDUSTRIAL MEDICAL INTERFACE
>
LED lighting
>
EV / HEV – Power management
>
Infotainment
>
ADAS / Autonomous (need of sensors)
>
LED lighting
>
Instrumentation
>
Power distribution / Renewables
>
Commercial Vehicle driver shortage
>
ADAS / Autonomous (need of sensors)
>
Driver and worker safety
>
IoT
>
Never events (reduce pressure injuries, etc.)
>
Patient quality – hospital rating systems
>
Wellness
>
Affordable Care Act – pay for outcomes vs. treatment
>
Tele-medicine / homecare
>
Flexible/ configurable user interfaces
>
Kiosks
>
Digital Bandwidth demand (IoT, 5G)
>
Product design – brand differentiation
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FY 2018 FY 2019 FY 2020 (est.) FY 2021 (est.) FY 2022 (est.)
*Booked business as of 7/19
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Fund the Business
Acquisitions $553M 58% Cap Ex $143M 15%
Return to Shareholders
Share Repurchase $ 72M 7% Dividends $ 58M 6% Product Development $135M 14%
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* Millions ± Adjusted, Net Income + Depreciation + Amortization - CapEx ** Estimate
$88 $123 $84 $85 $130 $0 $50 $100 $150 FY2016 FY2017 FY2018 FY 2019 FY 2020**
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Grow Organically and Inorganically
Leverage existing technologies to grow organically, increasing $ content/vehicle faster than volumes are dropping Invest in innovation which will integrate our technologies into new products Seek acquisitions in Industrial and opportunistically in Medical Device and Automotive
Strong Financial Management
Optimize capital allocation Expand margins and ROIC - SGA efficiency, footprint rationalization and other initiatives Seek to maintain effective tax rate via leverage of global manufacturing footprint Focus on debt repayment 19
EPS
Pre-Tax Income
Income Tax Rate
Revenue
Depreciation and Amortization
Free Cash Flow
CapEx 20
Patented Technology Solutions Strong Product Development Heritage Organic Product Growth Substantial Free Cash Flow Generation Strong Balance Sheet Capital Deployment Focused on Value Creation Broad Customer Base Global Lean- Manufacturing and Engineering Footprint Highly Vertically Integrated
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