D.A. DAVIDSON'S 18TH ANNUAL INDUSTRIALS AND SERVICES CONFERENCE - - PowerPoint PPT Presentation
D.A. DAVIDSON'S 18TH ANNUAL INDUSTRIALS AND SERVICES CONFERENCE - - PowerPoint PPT Presentation
D.A. DAVIDSON'S 18TH ANNUAL INDUSTRIALS AND SERVICES CONFERENCE September 18, 2019 This presentation contains certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and
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 press release 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 as our annual and quarterly reports. Such factors may include, without limitation, the following: dependence on a small number of large customers, including two large automotive customers; dependence on the automotive, appliance, commercial vehicle, computer and communications industries; international trade disputes resulting in tariffs: investment in programs prior to the recognition of revenue; timing, quality and cost of new program launches; changes in U.S. trade policy; ability to withstand price pressure, including pricing reductions; ability to successfully market and sell Dabir Surfaces; currency fluctuations; customary risks related to conducting global operations; recognition of goodwill impairment charges; dependence on the availability and price of raw materials; fluctuations in
- ur gross margins; ability to withstand business interruptions; ability to successfully benefit
from acquisitions and divestitures; dependence on our supply chain; income tax rate fluctuations; ability to keep pace with rapid technological changes; breach of our information technology systems; ability to avoid design or manufacturing defects; ability to compete effectively; ability to protect our intellectual property; success of Pacific Insight, Procoplast and Grakon and/or our ability to implement and profit from new applications of the acquired technology; significant adjustments to expense based on the probability of meeting certain performance levels in our long-term incentive plan; and costs and expenses due to regulations regarding conflict minerals.
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Methode Is…
788 patents 450+ global engineers 7,500+ employees $1B Sales*
Automotive 73% Industrial 21% Interface 6%
10-year revenue growth CAGR
- f 8.8%+
10-year EBITDA growth CAGR
- f 22.7%+
Leading developer of custom- engineered solutions and application-specific products utilizing the latest technologies for the Automotive, Industrial and Medical markets.
North America 64% Europe 24% Asia 12%
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*FY 2019 + Through FY 2019
FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
*Booked business as of 9/2019
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Sensing Technology Organic Product Growth
Growing Content Per Vehicle
Rivian Electric SUV
- Door Accent Lamps
- Front Door Map Pocket Lamps
- Rear Door Map Pocket Lamps
- Driver Accent Lamp
- Center Accent Lamp
- Passenger Accent Lamp
- Console Tray Lamp
- Console Bin Lamp
- Reading/Courtesy Lamps
- Footwell Lamps
$228
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Ford Explorer
- Ambient Lighting
- Overhead Console
- Integrated Center Panel
- Ignition Switch
- Brake Switch
- IP Switches
$75
Booked business as of 9/2019
Growing Content Per Vehicle
Tesla Model X
- Grakon - $142
- Pacific Insight - $117
- Power Solutions - $66
$325 Tesla Model S
- Grakon - $235
- Power Solutions - $65
$300 Tesla Model 3
- Grakon - $134
- Power Solutions - $26
$160 Tesla Model Y
- Grakon parts: $134
- Power Solutions - $26
$160 6
Booked business as of 9/2019
Leading, Patented Automotive Technology Solutions
Assembly Decorating Electronics Metal Plastic Testing
AUTOMOTIVE INTERIOR
Headlamp Switches Steering Wheel Switches Window Switches Touchpads Rear Seat Controls Overhead Consoles Touchscreens Centerstacks Value Added Switches Smart Knobs Terrain Management Master Controllers Ambient Lighting
AUTOMOTIVE EXTERIOR
Gesture/Touch Tailgate Emblem Integrated Tailgate Module Advanced Illumination Smart Towing In-glass Messaging Keyless Entry Handle-free Door Solution Side Mirror Projection
LIGHTING
Sill Plates Flood Lighting Ambient Lighting Material Illumination Dome Lamps Seat Illumination Full Color Spectrum Holographic Lighting
ELECTRIC VEHICLE
Intelligent Battery Connection Battery Bus Bar Connections Battery Disconnect Unit Powerbud Connectors Complex Insert Molded Bus- bar/Carriers Powder Coated Bus Bar Flexible Bus Bar Laminated Bus Bar
COMPLEX INSERT MOLDED
Transmission/HEV Controller (Lead Frame) Engine Control Units Ignition Switch Anti-Lock Braking Assemblies Pedal Assemblies Door Latch Actuator Horn Contact Unit Transmission Solenoid Connector
Forward Lighting Fog Lighting RGB Ambient Lighting Interior Task Lighting Storage Lighting Safety Lighting Marker Lighting Work Lighting Electronic 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 Assembly Power Cable Solutions Thermal Solutions Powerbud Motor Connection Open Compute Connector
FLUID LEVEL SENSING
Electronic Pump Switches, Sensors, And Alarm Products Offer Superior Reliability, Durability, And Performance Home, Commercial, Municipal, Marine, And RV Applications
Leading, Patented Industrial Technology Solutions
Assembly Decorating Electronics Metal Plastic Testing
Leading, Patented Medical Technology Solution
- Innovative technology for pressure injury prevention
- Clinically shown to reduce pressure injuries in surgical cases
- Converts standard hospital or home bed to specialty bed
- Suitable for use across the continuum of care
- Improves patient comfort and is well accepted by clinical staff
- New Dabir compact system delivers greater flexibility outside
surgical environment
Controller Interconnect
Dabir Surgical System Dabir Compact System
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An Enviable Customer List
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Global Manufacturing Footprint
LONTZEN, BELGIUM SHANGHAI, CHINA 166,000 Sq Ft 566 Employees FRESNILLO, MEXICO 95,000 Sq Ft 860 Employees NASR, EGYPT 11,600 Sq Mt 530 Employees MRIEHEL, MALTA 28,000 Sq Mt 1,330 Employees MONTERREY, MEXICO 208,000 Sq Ft 1,180 Employees and 295,000 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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Global Sales and Engineering Centers
*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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Strong Product Development Heritage
ICS With Touch Controls ICS With Touchscreen Multimedia Controller Overhead Console Integrated Tailgate Module Seat Sensor Pressure Injury Prevention Overlay
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AUTOMOTIVE INDUSTRIAL MEDICAL INTERFACE
>
LED lighting
>
EV / HEV – Power management
>
Infotainment
>
ADAS / Autonomous
>
LED lighting
>
Instrumentation
>
Power distribution / Renewables
>
Commercial vehicle driver shortage
>
Driver and worker safety (video feedback)
>
Never events (pressure injuries falls, infections, etc.)
>
Patient quality – rating systems
>
Wellness
>
Affordable care act – pay for outcomes vs. Treatment
>
Tele-medicine / homecare
>
Flexible/ configurable touch screens
>
Kiosks
>
IOT – bandwidth
>
Product design – brand differentiation
Growth Drivers By Segment
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Capital Deployment Focused on Value Creation
Fund the Business
Acquisitions $556M 57% Acquisitions $556M 57% Cap Ex $152M 17% Cap Ex $152M 17%
Return to Shareholders
Share Repurchase $ 72M 7% Share Repurchase $ 72M 7% Dividends $ 57M 6% Dividends $ 57M 6% Product Development $130M 13% Product Development $130M 13%
*FY 2019 product development, debt management, dividend and capex data are projections. No share buyback, dividend adjustment or additional acquisitions are included in FY 2019
- calculations. As of 11/8/2018.
$978 Million Allocated Fiscal Years 2016-2019*
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Strong Cash Flow and Balance Sheet
* Millions ± Adjusted, see Non-GAAP reconciliation on Website ** Estimate
$43 $100 $88 $123 $84 $85 $130 $0 $50 $100 $150 FY 2014 FY 2015 FY 2016 FY 2017 FY2018 FY 2019 FY 2020**
Free Cash Flow*±
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Methode Outperformed the Market
Automotive Industry Volumes Versus Methode’s Automotive Sales
- 10.1%
- 2.2%
- 6.6%
- 18.7%
8.0% 17.1%
- 0.6%
- 17.5%
- 25%
- 20%
- 15%
- 10%
- 5%
0% 5% 10% 15% 20%
CY Q2 2019 MEI Q1 FY 2020* Global NA Europe China
*Excludes impact of currency
+ Source, Ward’s, JD Power, ACEA
- Grakon Tesla sales in NA
- Strong mix of products for SUVs and
pickup trucks in NA
- 6 launches - 3 in NA, 3 in Europe
- Limited exposure to domestic Chinese
automotive OEMs
- Methode Asia affected by passenger
car slowdown and pricedowns
- New product launches during FY 2020
should help offset headwinds
+
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FY 2020 Guidance Affirmed $3.25-$3.55
EPS
$150.3-164.3M
Pre-Tax Income
18-21%
Income Tax Rate
$1.13-1.17B
Revenue
$51-$54M
Depreciation and Amortization
$122-$136M
Free Cash Flow
$48-$54M
CapEx 18
Determining Projected FY 2020 EBITDA
(Dollars In Millions) 19
FY 2019 EBITDA FY 2019 Acquisition and Restructuring Costs Effect of Reduced Passenger Car Production EBITDA of New Automotive and Laundry Launches EBITDA of Additional Grakon Revenues
(From Additional 4 1/2 Months of Ownership)
Benefit of Initiatives to Reduce Costs FY 2020 EBITDA Projection
Launches:
- New Ford
Integrated Tailgate Module and Overhead Consoles programs
- Laundry platform
- New E-bike
programs Increased from $19M estimate at end of Q4 FY 2019 due to better than anticipated tariff mitigation
Framework for Acquisitions
Target companies “not for sale” Be opportunistic with companies being auctioned Focus on Methode’s core businesses and capabilities –Industrial, Medical Device, Automotive
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Continued Value Creation
Grow Organically and Inorganically
Leverage existing technologies to grow organically increasing $content/vehicle faster than volumes are dropping Invest in vertical integration which will integrate our technologies into new products Seek acquisitions in Industrial and Medical Device and opportunistically in the 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 Debt reduction 21
Balanced Risk/Reward Amid Macro Uncertainties
EV penetration and integrated solutions growing Strong, improving y/o/y free cash flow will allow debt repayment and capital deployment European and China automotive industry weakness Stronger end demand in Commercial Vehicle and Off-Highway Lower anticipated U.S. SAAR y/o/y FY 2019 cost-saving initiatives will benefit margin profile
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Impact of trade tariffs on global economy
Investment Appeals
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 Manufacturing and Engineering Footprint Highly Vertically Integrated
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