Methode Electronics, Inc. · NYSE:MEI
Methode Electronics — 2020 Baird Global Industrial Conference
24 slides from Methode Electronics's conference presentation, Nov 10, 2020
Slide 1: 2020 Baird Global Industrial Conference
2020 Baird Global Industrial Conference November 10, 2020 Don Duda, President and CEO Ron Tsoumas, CFO Rob Cherry, VP Investor Relations
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 and Net Debt. Reconciliation to the nearest GAAP measures
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: 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 8: 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 9: Electric Vehicle Solutions
Electric Vehicle Solutions Power Solutions Ambient & Functional Lighting Busbars for Inverter, Busbars for Battery Overhead Consoles Turn Signal w/ Camera Charger, & e-Motor Pack Connections Connections Battery Disconnect HV Power Connectors Interior LED Modules Exterior LED Lighting Battery Pack Ch
Slide 10: 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 10 Tra
Slide 11: 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 12: 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 13: 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 13
Slide 14: 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 14
Slide 15: 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 15
Slide 16: Medical
Solutions & Technologies Medical Brands Products Growth Drivers Customers 1 Pressure Injury Prevention 2 Aging Population 3 Rising Hospital Costs 4 Long-Term Care 16
Slide 17: 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 18: 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 $102 100 0.30 80 60 0.20 40 0.10 20 0 0.00 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 18 Cons
Slide 19: Deleveraging Balance Sheet
Deleveraging Balance Sheet ($ in millions) Net Debt $246.7 $229.2 $209.4 $209.3 $179.5 $177.1 $134.8 $138.8 FY19 Q2 FY19 Q3 FY19 Q4 FY20 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY21 Q1 ➢ Deleveraging Since Grakon Acquisition in FY19 Q2 ➢ Net Debt / TTM EBITDA Ratio* of 0.7 at end of FY21 Q1 * See Appendix for re
Slide 20: Inorganic Growth Framework
Inorganic Growth Framework ▪ Proactive (Companies “Not For Sale”) Target ▪ Opportunistic ▪ Primary: Industrial Market ▪ Secondary: Transportation and Medical ▪ Must Align with Our Strategy (Diversification) ▪ Can Leverage Methode’s: Fit ‒ Technologies ‒ Path to Market ‒ Manufacturing Capabilities (C
Slide 21: FY25 Long-Term Incentive Plan EBITDA Target
FY25 Long-Term Incentive Plan EBITDA Target EBITDA* EBITDA Growth Drivers ($ in millions) $300 − End-of-Life Programs $207 + Organic Sales Growth + Operational Improvements $144 + Acquisitions − Business Exits FY15 FY20 FY25 Target * See Appendix for reconciliation to GAAP In September 2020, our exe
Slide 22: 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 23: Thank you
QAETHODE ELECTRONICS Thank you
Slide 24: 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 Expense, Net (0.7) (0.7) (0.4) 0.9
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