Methode Electronics, Inc. · NYSE:MEI
Methode Electronics — 2013 Stifel Nicolaus Technology Conference
39 slides from Methode Electronics's conference presentation, Feb 5, 2013
Slide 1: Innovation Drives Long-Term Growth
Innovation Drives Long-Term Growth 2013 Stifel Nicolaus Technology Conference February 5, 2013
Slide 2: Safe Harbor
2 Safe Harbor 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
Slide 3: 3
3
Slide 4: Hitting Its Stride
4 Hitting Its Stride > Sales and EPS will grow FY13 over FY12 > Sales CAGR projection of 12% FY12 to FY16 > Sustainable innovation, robust technology – 290 patents > Capitalizing on fundamental changes in large, growth markets > Strong balance sheet - ~$85 million in net cash and credit availability
Slide 5: Three World-Class Solution Groups
5 Three World-Class Solution Groups Au tomoti ve • Integrated center console modules • Electronic and electromechanical devices • Customized sensors In te rc on n ec t • Field-effect technology and user-interface panels • Safety radio remote controls • Copper and fiber optic interconnect solutions •
Slide 6: Global Operations
6 Global Operations FY12 Sales By Manufacturing Location FY12 Sales By Segment 58.4% 27.5% 11.2% 2.9% Automotive Interconnect Power Solutions Other 44.0% 32.0% 24.0% North America Europe Asia
Slide 7: Leader in Connected and Green Solutions for the Automotive Industry
7 Leader in “Connected” and “Green” Solutions for the Automotive Industry
Slide 8: Connected Solution: Center Consoles
8 Connected Solution: Center Consoles > “Center Stack is new high-stakes battleground” Auto News September 5, 2011 > Opportunity for Methode: Once on a platform, have opportunity to provide other innovative and proprietary content > For OEMs • Value of automobile interior being built around connecti
Slide 9: Connected Solution: Center Consoles (Ford)
9 Connected Solution: Center Consoles > Two awards with Ford for Model Years 2011 and 2013 • Utilize TouchSensor’s Field-Effect and Integrated Back Lighting technologies • $40 million annually at full launch in FY13 • 2011 MKX, Edge, & Explorer • 2013 Taurus, Flex, MKS, & MKT • Standard on Lincoln m
Slide 10: Connected Solution: Center Consoles (GM)
10 Connected Solution: Center Consoles >GM K2xx truck, K2xx SUV and 31xx lightweight truck platforms • Estimated $216m/year at full launch in FY16* • Five-year program life • No take rate, standard on every model • Methode will provide the entire center console including the display, touchscreen and
Slide 11: Connected Solution: Transmission Lead Frame
11 Connected Solution: Transmission Lead Frame > Transmission Lead Frame • Integrated power and signal distribution backbone for transmission controller • Highly complex insert molded assembly reduces electrical connections required with traditional design • Improves system reliability, reduces cost
Slide 12: Connected Solutions: Growth Drivers
12 Connected Solutions: Growth Drivers > Smartphone interfacing, data downloads, email communications, internet access > Vehicles must become the “glitch-free” connector and communicator > NHTSA considering vehicle-to-vehicle communications (V2X) to warn drivers of potential hazards Consumer Reports
Slide 13: Connected Opportunities: Center Consoles
13 Connected Opportunities: Center Consoles > Capacitive touchscreens with functionality similar to iPhone or iPad > Lower costs • Lower tooling bills than traditional mechanical systems • Ford Edge - one complete panel versus bezel with 21 individual buttons • Electronic design can be carried over
Slide 14: Connected Opportunities: Biometrics
14 Connected Opportunities: Biometrics > Biometric Verification Technology • Based on proven multi-spectral imaging technology developed by Lumidigm, Inc. • Methode has exclusive license for transportation market • Robust and repeatable • Auto-hardened: Works in extreme, harsh environments • Potenti
Slide 15: Green Solutions: EV Bus Bars
15 Green Solutions: EV Bus Bars > Bus Bar Assemblies for Nissan Leaf Electric Vehicle • Nissan North America and Europe Lithium-ion battery cells • Each vehicle requires 48 battery modules • Three Methode assemblies utilized on each battery module • Methode developed and implemented an innovative, a
Slide 16: Green Solutions: Transmission Sensor
16 Green Solutions: Transmission Sensor > Magneto-elastic technology enables accurate and repeatable measurement of the clutch plate position in the new generation of fuel efficient, dual clutch transmissions • Resolution nearly ten times current, commercially viable technology • Withstands harsh en
Slide 17: Green Opportunities: Torque-Sensing
17 Green Opportunities: Torque-Sensing Characteristic Today Methode’s Magneto-elastic Technology Torque calculated by Estimation Measurement Completely real time No Yes Accuracy invariant to temperature and altitude No Yes Accuracy of initial calibration maintained over time Sufficient Excellent Cal
Slide 18: Green Opportunities: Transmissions
18 Green Opportunities: Transmissions > Magneto-elastic Torque-Sensing Technology • “…This is being called the holy grail of transmission control...” Ford Chief Engineer for New Transmissions Craig Renneker • “Real time torque sensing is a game changer for transmissions and the most significant adva
Slide 19: TouchSensor and Hetronic Enabling Differentiation
19 TouchSensor and Hetronic Enabling Differentiation
Slide 20: User Interface Solutions: White Goods
20 User Interface Solutions: White Goods > TouchSensor’s user interfaces are found on over 60% of the solid-state touch interfaces in North America • Integrate Touch, LED’s & Displays and decorative fascia into one UI sub-assembly • Offering includes discrete key designs as well as high-resolution L
Slide 21: User Interface Solutions: White Goods
21 User Interface Solutions: White Goods > TouchSensor recently awarded fabric care console program with integrated Touch • Includes Whirlpool “Duet” and Maytag “Maxima” front-load product lines • $30-40 million at full launch beginning in second half of FY14 • Launches in 4 phases across multiple p
Slide 22: User Interface Solutions: Industrial
22 User Interface Solutions: Industrial > Hetronic safety radio remote control solutions • Used on five continents to control multi-million dollar equipment safely and precisely Locomotives, Rail Car Movers, Trains Construction Equipment - Tower Cranes, Loader Cranes, Concrete Pumps, Excavators,
Slide 23: User Interface Solutions: Industrial
23 User Interface Solutions: Industrial > Hetronic safety radio remote control solutions • Pioneering features Fail Safe and Redundant Emergency Stop Circuitry Interference Protection Remotely Programmable Operator friendly and impact resistant • Designed to withstand the most challenging wo
Slide 24: TouchSensor & Hetronic Opportunities
24 TouchSensor & Hetronic Opportunities > TouchSensor • “Touch Experts” – combining touch technology, modern illumination techniques, esthetics and unrivaled launch management capabilities • Opportunities in Medical equipment Vending Industrial and consumer level sensing (LevelGuard brand) > H
Slide 25: Innovative Power Distribution and Thermal Management Solutions
25 Innovative Power Distribution and Thermal Management Solutions
Slide 26: Power Solutions: High Current Demand
26 Power Solutions: High Current Demand > Design and manufacture innovative products for military, aerospace, industrial and automotive markets > For • Wind turbines • Solar panels • Electric and Hybrid vehicles • Next generation light rail • New high efficiency servers • Fighter jet radar systems •
Slide 27: Power Solutions: High Current Demand
27 Power Solutions: High Current Demand > Collaborate with customers to develop robust systems that meet stringent electrical and thermal performance, weight and cost needs > Fortune 100 customer base > Methode’s power solutions are increasing power distribution density, improving energy efficiency,
Slide 28: Power Opportunities: Eetrex
28 Power Opportunities: Eetrex > 90% ownership in Eetrex - developer of power electronics such as chargers, inverters and battery management systems > Eetrex specializes in application of proprietary embedded system electronics for super efficient power management > Stationary storage
Slide 29: Rebuilding Revenue and Improving Profitability and Margins
29 Rebuilding Revenue and Improving Profitability and Margins
Slide 30: Future Revenue Growth
30 Future Revenue Growth* > Sales projections as of November 2012 > Projections are approximate and may vary 15% to 20% based on economic conditions, customer demands, and other factors > Based on current LMC Automotive volume data and other sources > Projection for FY 13 represents the midpoint of
Slide 31: Major Anticipated Revenues
31 Major Anticipated Revenues *All numbers approximate FY14 > $139m – GM center console > $25m – TouchSensor laundry program > $10m – Nissan-Renault EV busbars > $8m – Volkswagen, Jaguar, McLaren ergonomic switches FY15 > $195m – GM center console > $40m – TouchSensor laundry program > $10m – GM Lin
Slide 32: OEM Percent in Region
32 OEM Percent in Region NORTH AMERICA (62% of Total Sales) General Motors Group Ford Group 70% 29% EUROPE (20% of Total Sales) Renault-Nissan Group Volkswagen Group Ford Group Tata Group Fiat-Chrysler Group PSA Group McLaren Geely Group Mazda Motors General Motors Group Aston Martin BMW Group 20% 2
Slide 33: Recent Financial History
33 Recent Financial History > FY12 vs. FY11 • Sales improved 8.6% New product introductions & higher market penetration in N.A. and Asian automotive Offset by continued softness in appliance market and sale of Optical business • Significantly higher effective tax rate – 28% tax expense in FY12 v
Slide 34: FY13 Guidance
34 FY13 Guidance > Vertical integration of paint and laser etch capabilities completed > Design, development, launch costs for automotive programs > Development costs for power electronics products (chargers, inverters) > Sales from acquisition of paint and laser etch business dilutive through third
Slide 35: Rebuilding Margins
35 Rebuilding Margins Restructuring Post Restructuring FY09 FY10 FY11 FY12 FY14 Target FY15 Target Auto 16.5% 18.3% 17.6% 14.1% High teens% Low to mid 20% Interconnect 24.0% 28.7% 30.3% 28.3% Mid to high 20% High 20 to low 30% Power 12.9% 26.0% 21.0% 16.5%* Low 20% Mid 20% Gross Margins Pre-Tax Oper
Slide 36: Why Invest in Methode Today?
36 Why Invest in Methode Today?
Slide 37: Investing In Our Future Growth
37 Investing In Our Future Growth > Continue strong investment in engineering group to bid new business opportunities and launch programs • Most new business wins do not realize revenue for 18-24 months > Invested approximately 4.4% of net sales in R&D in FY 2012 • Strong business case • Most develo
Slide 38: Hitting Our Stride
38 Hitting Our Stride > Execution, seasoned launch and design teams > World-class manufacturing capabilities due to Automotive pedigree > Vertical integration and continuous manufacturing systems improvement > Technology differentiates customers’ products to drive higher margins > Increasingly worki
Slide 39: Methode's Business Strategy
39 Methode’s Business Strategy Shareholder Value Innovation New Products Offering Expanded Content Revenue Growth Improved Margins and Profitability
Methode Electronics — 2013 Stifel Nicolaus Technology Conference on 6ix