Methode Electronics, Inc. · NYSE:MEI
Methode Electronics — 23rd Annual Needham Growth Conference (January 2021)
27 slides from Methode Electronics's conference presentation, Jan 12, 2021
Slide 1: Methode Electronics, Inc. Investor Relations Presentation
Methode Electronics, Inc. Investor Relations Presentation January 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 provide
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures To supplement the company's financial statements presented in accordance with generally accepted accounting principles in the United States (“GAAP”), Methode uses certain non-GAAP financial measures, such as EBITDA, Free Cash Flow and Net Debt. Reconciliation to the neare
Slide 4: Methode at a Glance
Methode at a Glance Fiscal 2020 Sales A leading developer and manufacturer of custom-engineered Geography Solutions solutions and application-specific products utilizing the latest Digital 2% Sensors 4% Medical <1% technologies for the transportation, industrial and medical markets. Asia Power 11% 1
Slide 5: Historical Growth
Historical Growth $ in millions EBITDA* Sales Diluted EPS $ per share $1,000 $1,024 $4.00 1,000 $908 $809 $817 $3.50 FY16 - FY20 CAGR $3.26 800 $3.00 Sales $2.48 6.1% $2.43 $2.50 600 $2.20 $2.00 EBITDA* 11.5% 400 $1.52 $1.50 $207 $1.00 Diluted EPS 200 $134 $140 $153 $155 10.6% $0.50 0 $0.00 FY16 FY1
Slide 6: Global Footprint
Global Footprint 6 Cost-Efficient Manufacturing Footprint with Proximity to Strategic Markets
Slide 7: ESG Overview
ESG Overview Robust Governance Commitment to Emphasis on Framework Safe Operations Clean Tech Supporting ethical, Demonstrated history New business focused on inclusive and beneficial of operational safety Electric Vehicles and LED actions for stakeholders and quality Lighting solutions 7
Slide 8: Building Upon Track Record of Responsibility
Building Upon Track Record of Responsibility Enhancing Investor Engagement New ESG-focused Investor Relations webpage Zero: Aligning Operations with ESG Product safety recalls Holding the core belief that corporate responsibility is good for the world and good for business too Material environmental
Slide 9: Investment Thesis
Investment Thesis Exposure to Key Product Portfolio Operational & Strong Balance Market Trends Management Quality Excellence Sheet Focus ➢ Electrification & Sustainability ➢ Focused on Systems ➢ Lean & Vertical Integration ➢ Balanced Capital Allocation ▪ EV, Commercial Vehicles Integration vs. Compo
Slide 10: Strategic Priorities
Strategic Priorities Customer & Program Diversification ▪ Capitalize on Exposure to Trends in EV, Commercial Vehicle, & Cloud Computing ▪ Leverage Power, LED Lighting, and Sensor Technology across Customer Base ▪ Increase Investment in Field Sales, Process, and Incentives Organic & Inorganic Growth
Slide 11: Electric Vehicle Solutions
Electric Vehicle Solutions User Power Solutions Interface Ambient & Functional LED Lighting EV Power LED Lighting Integrated Turn Overhead Consoles Busbars for Inverter, & Camera Module Busbars for Battery Charger, & e-Motor Pack Connections Connections Interior Modules Battery Disconnect Power Conn
Slide 12: Increased Content Per Vehicle
Increased Content Per Vehicle EV Expected to be HSD % of FY21 Total Sales, Growing to 10%+ in FY22 Internal Combustion Vehicles Battery & Hybrid Electric Vehicles • User Interface • User Interface • Interior & Exterior Lighting • Interior & Exterior Lighting • Sensors • Sensors • e-Powertrain 12 Tra
Slide 13: User Interface
Solutions & Technologies User Interface Brands Products Growth Drivers Customers 1 Electric Vehicles 2 User Information Touch Panels Overhead Consoles 3 Video Feedback Touchscreens Access Modules Ergo-Switches Ind. Remote Controls 4 Worker Safety Ergo-Knobs Video Feedback Center Stacks Safety Stop C
Slide 14: Lighting
Solutions & Technologies Lighting Brands Products Growth Drivers Customers 1 LED Lighting 2 Commercial Vehicle Cabs 3 Driver and Vehicle Safety Forward (Head, Fog) Backlighting Rear & Center Stop Projection 4 Brand Differentiation Ambient/Dome Work Lamps Signal Lighting Control Task/Reading/Visor Mo
Slide 15: Sensors
Solutions & Technologies Sensors Brands Products Growth Drivers Customers 1 e-Bikes 2 Driver and Vehicle Safety 3 Automation Linear Position Speed & Angle Displacement Discrete & Analog Fluid Level Switching 4 Health & In-Home Fitness Torque Proximity Force & Load Hidden Switches 15
Slide 16: Power Distribution
Solutions & Technologies Power Distribution Brands Products Growth Drivers Customers 1 EV Power Management 2 Electrification 3 Cloud Computing Busbars Cold/Chill Plates Contacts Lead Frames Connectors Bypass Switch 4 Renewable Energy Cabling Battery Disconnects Heat Sinks Power Stacks 16
Slide 17: Digital Data
Solutions & Technologies Digital Data Brands Products Growth Drivers Customers 1 Information Technology 2 Cloud Computing 3 Broadband 1G Copper Transceivers 10G Copper Transceivers 4 e-Commerce g.hn & g.fast Modules Micro-DPUs Cages 17
Slide 18: Medical
Solutions & Technologies Medical Brands Products Growth Drivers Customers 1 Pressure Injury Prevention 2 Aging Population 3 Rising Hospital Costs 4 Long-Term Care 18
Slide 19: Capital Allocation History and Strategy
Capital Allocation History and Strategy ($ in millions) Share Purchases $72 Dividends Paid $75 10%: Returning Capital Balanced Capital Allocation to Shareholders Strategy Debt Reduction $348 25%: Deleveraging ➢ Continue to Pay Down Debt Balance Sheet ➢ Return Capital to Shareholders via R&D $170 Div
Slide 20: Strong Cash Flow and Dividend
Strong Cash Flow and Dividend Net Cash Provided by Operations Cash Dividends Paid 6.1% CAGR 5.1% CAGR $ in millions $ per share 160 $145 0.50 $141 $0.44 $0.44 140 $0.40 $118 0.40 $0.36 $0.36 120 $111 $102 100 0.30 80 60 0.20 40 0.10 20 0 0.00 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 20 Cons
Slide 21: Deleveraging Balance Sheet
Deleveraging Balance Sheet ($ in millions) Net Debt $246.7 $229.2 $209.4 $209.3 $179.5 $177.1 $134.8 $138.8 $105.3 FY19 Q2 FY19 Q3 FY19 Q4 FY20 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY21 Q1 FY21 Q2 ➢ Deleveraging Since Grakon Acquisition in FY19 Q2 ➢ Net Debt / TTM EBITDA* of 0.5 at End of FY21 Q2 ➢ Balance Sh
Slide 22: Inorganic Growth Framework
Inorganic Growth Framework ▪ Proactive (Companies “Not For Sale”) Target ▪ Opportunistic ▪ Primary: Industrial Market ▪ Secondary: Transportation and Medical ▪ Must Align with Our Strategy (Diversification) ▪ Can Leverage Methode’s: Fit ‒ Technologies ‒ Path to Market ‒ Manufacturing Capabilities (C
Slide 23: FY25 Long-Term Incentive Plan EBITDA Target
FY25 Long-Term Incentive Plan EBITDA Target EBITDA* EBITDA Growth Drivers ($ in millions) $300 + Organic Sales Growth $207 + Operational Improvements + Acquisitions $144 − End-of-Life Programs − Business Exits FY15 FY20 FY25 Target * See Appendix for reconciliation to GAAP In September 2020, our exe
Slide 24: Investment Thesis
Investment Thesis Exposure to Key Product Portfolio Operational & Strong Balance Market Trends Management Quality Excellence Sheet Focus ➢ Electrification & Sustainability ➢ Focused on Systems ➢ Lean & Vertical Integration ➢ Balanced Capital Allocation ▪ EV/HEV, CV, LED Lighting Integration vs. Comp
Slide 25: Thank you
QAETHODE ELECTRONICS Thank you
Slide 26: Appendix
Appendix METHODE ELECTRONICS, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASURES (Unaudited) (in millions) FY15 FY16 FY17 FY18 FY19 FY20 EBITDA: Net Income $ 101.1 $ 84.6 $ 92.9 $ 57.2 $ 91.6 $ 123.4 Income Tax Expense 19.8 26.3 23.0 66.6 12.0 25.3 Interest (Income) Expense, Net (0.7) (0.7) (
Slide 27: Appendix
AETHODE Ap pe n d ix ELECTRONICS TOTAL NET DEBT/EBITDA (Dollars in Millions) LIM October 31, 2020 Net Income 5 130.6 Income Tax Expense 153 Interest Expense, Net 75 Amortization of Intangibles 19.2 Depreciation 30.1 EBITDA g 202.7 Gross Debt Less: Cash and Cash Equivalents Net Debt Total Net DebtEBI
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