Slide 1: 2020 Needham Growth Conference
2020 Needham Growth Conference January 15, 2020 Ron Tsoumas, CFO Mark Shermetaro, VP Corporate Development
Slide 2: 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 provided under the securities laws
Slide 3: Methode is …
Methode is … 10-year Leading developer and 788 patents revenue manufacturer of custom- growth CAGR 450+ global engineers engineered solutions and of 8.9% application-specific products 6,200+ employees utilizing the latest technologies for the Automotive, Industrial $1+ Billion Sales 10-year and Medi
Slide 4: Methode's reporting segments
Methode’s reporting segments are… Automotive Industrial Medical Interface TECHNOLOGY ENGINEERING MANUFACTURING 4
Slide 5: Automotive
Li AUTOMOTIVE
Slide 6: Automotive Interior Solutions
Automotive Interior Solutions OVERHEAD CONSOLES HEADLAMP TOUCHSCREENS SWITCHES CENTERSTACKS STEERING WHEEL SWITCHES VALUE ADDED SWITCHES WINDOW SWITCHES SMART KNOBS TOUCHPADS TERRAIN REAR SEAT MANAGEMENT CONTROLS MASTER CONTROLLERS 6
Slide 7: Automotive Lighting Solutions
Automotive Lighting Solutions SILL PLATES FLOOD LIGHTING AMBIENT LIGHTING MATERIAL ILLUMINATION DOME LAMPS SEAT ILLUMINATION FULL COLOR SPECTRUM HOLOGRAPHIC LIGHTING 7
Slide 8: Automotive Exterior Solutions
Automotive Exterior Solutions IN-GLASS MESSAGING GESTURE/TOUCH TAILGATE EMBLEM KEYLESS ENTRY INTEGRATED TAILGATE MODULE HANDLE-FREE DOOR SOLUTION ADVANCED ILLUMINATION SIDE MIRROR PROJECTION SMART TOWING 8
Slide 9: Electric Vehicle Solutions
Electric Vehicle Solutions 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 9
Slide 10: Transmission Control Solutions
Transmission Control Solutions Competitive Advantages 1 HIGHLY AUTOMATED PROCESSES 2 VERTICAL INTEGRATION SOPHISTICATED 3 MANUFACTURING TECHNOLOGY 10
Slide 11: Automotive Solutions
Automotive Solutions Competitive Advantages 1 CRITICAL FUNCTIONALITY 2 FLEXIBILITY AND STYLING 3 HIGHLY RELIABLE 4 VERTICAL INTEGRATION 5 SOPHISTICATED TECHNOLOGY 11
Slide 12: Industrial
(METHODE ELECTRONICS INDUSTRIAL
Slide 13: Commercial Vehicle Solutions
Commercial Vehicle Solutions AMBIENT LIGHTING TASK/READING LIGHTS STORAGE LIGHTING WARNING LIGHTS FOG LIGHTING MARKER LIGHTS TURN SIGNALS HEADLIGHTS SPOT LIGHTING 13
Slide 14: Grakon
Grakon Competitive Advantages 1 CRITICAL FUNCTIONALITY 2 HIGH CUSTOMIZATION/LOW VOLUME 3 ENHANCED AESTHETICS 4 HARSH ENVIRONMENTS 5 EXCEPTIONAL CUSTOMER RELATIONSHIPS 14
Slide 15: Hetronic Industrial Radio Remote Controls
Hetronic Industrial Radio Remote Controls 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 ACCESSOR
Slide 16: Hetronic Industrial Radio Remote Controls
Hetronic Industrial Radio Remote Controls Competitive Advantages 1 CUSTOM ENGINEERED 2 CERTIFIED FOR DEMANDING / HARSH ENVIRONMENTS (such as EX) 3 SOPHISTICATED RADIO FREQUENCY AND VIDEO FEEDBACK TECHNOLOGY 4 VERTICALLY INTEGRATED AND LOW COST COUNTRY MANUFACTURING 16
Slide 17: Power Solutions Group
Power Solutions Group BUS BAR SOLUTIONS POWER CABLE SOLUTIONS THERMAL SOLUTIONS POWER CONNECTORS POWER ASSEMBLY POWERBUD MOTOR CONNECTION OPEN COMPUTE CONNECTOR 17
Slide 18: Power Solutions Group
Power Solutions Group Competitive Advantages 1 CUSTOM ENGINEERED 2 VERTICAL INTEGRATION 3 RELIABLE IN DEMANDING ENVIRONMENTS 4 PATENTED CONNECTORS AND CONTACTS 5 POWER DISTRIBUTION EXPERTISE 18
Slide 19: Medical
AETHODE ELECTRONICS MEDICAL
Slide 20: New Technology for Pressure Injury Prevention
NEW TECHNOLOGY FOR PRESSURE INJURY PREVENTION REDUCE HOSPITAL READMISSIONS SHORTEN PATIENT STAYS LOWER SECONDARY INFECTION RATES IMPROVE PATIENT SATISFACTION SCORES IMPROVE QUALITY OF LIFE FOR THOSE AT RISK CONVERT A STANDARD HOSPITAL OR HOME BED INTO A SPECIALTY BED PORTABLE DESIGN CAN BE APPLIED I
Slide 21: Interface
INTERFACE 21
Slide 22: Appliance Panels
Appliance Panels INTEGRATED TEXT DEAD-FRONT MOLDING & ADVANCED LIGHTING DECORATION FLEXIBLE CIRCUIT BOARDS CAPACITIVE TOUCH EMBEDDED SOFTWARE SMARTKNOBS 2-SHOT MOLDING PAINT & LASER ETCH DIGITAL & PAD PRINTING TOUCHSCREEN BONDING IN MOLD LABELING & GLASS DECORATION 22
Slide 23: Fluid Level Sensing Solutions
Fluid Level Sensing Solutions ELECTRONIC PUMP SWITCHES, SENSORS, AND ALARM PRODUCTS OFFERS SUPERIOR RELIABILITY, DURABILITY, AND PERFORMANCE BILGE PUMP WITH LEVELGUARD TECHNOLOGY FOR HOME, COMMERCIAL, MUNICIPAL, MARINE, AND RV APPLICATIONS LEVELGUARD SUMP PUMP SWITCH ICE MAKER SENSOR 23
Slide 24: Growth Drivers By Segment
Growth Drivers By Segment AUTOMOTIVE INDUSTRIAL MEDICAL INTERFACE > LED lighting > LED lighting > Never events (reduce > Flexible/ configurable user pressure injuries, etc.) interfaces > EV / HEV – Power > Instrumentation management > Patient quality – hospital > Kiosks > Power distribution / rating
Slide 25: Competitive Factors
Competitive Factors Patented Broad Customer Substantial Free Technology Base Cash Flow Solutions Generation Global Sales, Strong Product Engineering and Strong Balance Development Lean Mfg. Sheet Heritage Footprint Capital Deployment Organic Product Highly Vertically Focused on Value Growth Integrat
Slide 26: Leading, Patented Technology Solutions
Leading, Patented Technology Solutions AUTOMOTIVE INTERIOR AUTOMOTIVE EXTERIOR LIGHTING ELECTRIC VEHICLE COMPLEX INSERT MOLDED Headlamp Switches Gesture/Touch Tailgate Emblem Sill Plates Intelligent Battery Connection Transmission Controller Steering Wheel Switches Integrated Tailgate Module Flood L
Slide 27: Leading, Patented Technology Solutions
Leading, Patented Technology Solutions FLUID LEVEL SENSING Headlamp / Fog / DRL Lighting Wireless Control and Feedback Bus Bar Solutions Sump Pump Switch Rear Lighting Wireless Video Feedback Power Connectors Bilge Pump Switch RGB Ambient Lighting Rf Proximity Detection Power Assemblies Sewage Level
Slide 28: Strong Product Development Heritage
Strong Product Development Heritage ICS With Touch Controls ICS With Touchscreen Multimedia Controller Integrated Tailgate Module Overhead Console Pressure Injury Prevention Overlay 28
Slide 29: Growing Content Per Vehicle
Growing Content Per Vehicle Ford Explorer Electric SUV $75 $228 • Integrated Center Panel • Ignition Switch • Brake Switch • Numerous interior lamps • IP Switches • Overhead Console • Ambient Lighting 29
Slide 30: Cross-selling our technology
Cross-selling our technology Grakon is booking new interior ambient lighting solutions business in the commercial vehicle and electric vehicle market by leveraging our Pacific Insight’s RGB LED light engine technology. PI’s RGB and single color LED light engines were originally developed for the Aut
Slide 31: New Sensor Application – Tow Load Sensor System
New Sensor Application – Tow Load Sensor [TLS] System Potential Benefits Ftongue ▪ Tongue Load ▪ Tow Load ▪ Driver Information Display Fsway ▪ Improved Ride and Handling While Ftow Towing 31
Slide 32: An Enviable Customer List
An Enviable Customer List MrtHODE 4 . ee A123 “Saige, or ADR sn @ apifow arsrom IMIG AMAZON AMAA aR RTS brase EM ctfteafne . @ CASES CAT Cisco. CLOHG <Gntz> Beas DAIMLER WUC) & Electrolux = GRUPPE @P FAW = 5 — @ FCA necincoo EBD iow’ @seren Soma ghibiswirbe! CTTRTUTE} ai GRAINGER <a) Hastiunro ac LA
Slide 33: Global Sales and Engineering Centers
Global Sales and Engineering Centers N E L SO N , C A N A D A B U R NL E Y , U . K . SE A T T L E , D E T R O I T , M I C H I G AN G AU - AL G E SH E I M & W ASH I N G T O N M U NI C H , G E R M ANY *CHICAGO, IL* SAN J O SE , T O K Y O , J AP AN CALIFORNIA OKLAHOMA CITY, OK B E I R U T , L E B ANO N
Slide 34: Global Manufacturing Footprint
Global Manufacturing Footprint L O NT Z E N , BELGIUM MRIEHEL, O N T A R I O , 155,000 Sq Ft M AL T A SH ANG H AI , CHICAGO, IL C A N A D A 110 Employees 299,000 Sq Ft C H I NA 35,000 Sq Ft 1,330 Employees 195,000 Sq Ft O K L AHO M A 110 Employees 566 Employees CITY,OK D O NG G U AN , C H I NA MONTE
Slide 35: Vertically Integrated Manufacturing Capabilities
Vertically Integrated Manufacturing Capabilities ASSEMBLY DECORATING ELECTRONICS METAL PLASTIC TESTING • Lean manufacturing focus • Automated Paint Lines • PCB assembly / processing • Stamping • Injection Molding • End-of-line testing (EOLT) • Work Cells • In-mold decorating (IMD) • Surface Mount li
Slide 36: Strong Cash Flow and Balance Sheet
Strong Cash Flow and Balance Sheet Free Cash Flow* ± $150 $100 $123 $129 $50 $88 $84 $85 $0 FY2016 FY2017 FY2018 FY 2019 FY 2020** * Millions ± Adjusted, Net Income + Depreciation + Amortization - CapEx ** Estimate 36
Slide 37: Capital Deployment Focused on Value Creation
Capital Deployment Focused on Value Creation $961 Million Allocated Fiscal Years 2016-2019 Fund the Business Acquisitions $553M 58% Cap Ex $143M 15% Product Development $135M 14% Return to Shareholders Share Repurchase $ 72M 7% Dividends $ 58M 6% 37
Slide 38: Deleveraging Since Grakon Acquisition in Q2 FY19
Deleveraging Since Grakon Acquisition in Q2 FY19 (Dollars in Millions) TTM Gross Debt / EBITDA Ratio* is 1.5 at end of Q2 FY20 Gross Debt and Net Debt $357.6 $302.9 $292.6 $283.1 $275.1 $246.7 $229.2 $209.4 $209.3 $179.5 Q2 FY19 Q2 FY19 Q3 FY19 Q3 FY19 Q4 FY19 Q4 FY19 Q1 FY20 Q1 FY20 Q2 FY20 Q2 FY20
Slide 39: Framework for Inorganic Growth
Framework for Inorganic Growth MEDICAL DEVICE TARGET COMPANIES “NOT FOR SALE” ACQUISITIONS ARE PRIORITY, BUT StayFOCUS close ON to CANNOT CONTROL METHODE’S Methode’s core TIMING/ CORE BUSINESSES businesses ANDand INDUSTRIAL VALUATION MULTIPLES capabilities CAPABILITIES BE OPPORTUNISTIC WITH COMPANIE
Slide 40: Continue Focus on Value Creation
Continue Focus on Value Creation Grow Organically and Inorganically Strong Financial Management Leverage existing technologies to grow organically, Optimize capital allocation increasing $ content/vehicle faster than volumes are dropping Expand margins and ROIC - SGA efficiency, footprint rationaliz
Slide 41: FY20 Financial Guidance Reaffirmed
FY20 Financial Guidance Reaffirmed $150.3-164.3M $122-$136M $48-$54M Pre-Tax Income Free Cash Flow* CapEx $3.25-$3.55 18-21% $51-$54M EPS Income Tax Rate Depreciation and Amortization FY20 Revenue Guidance Adjusted Due to adverse impact of UAW labor strike at GM of $32M $1.10-1.13B Revenue * Net Inc
Slide 42: Thank you
QAETHODE ELECTRONICS Thank you