Methode Electronics, Inc. · NYSE:MEI
Methode Electronics — Stifel 2021 Virtual Cross Sector Insight Conference
27 slides from Methode Electronics's conference presentation, Jun 9, 2021
Slide 1: Methode Electronics, Inc. Investor Relations Presentation
Methode Electronics, Inc. Investor Relations Presentation April 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 provid
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, Net Debt, and Adjusted Net Sales. Reconc
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: Increasing Content Per Vehicle
Increasing Content Per Vehicle EV Expected to be > 10% of FY21 Total Sales, Growing to Mid-Teens % in FY22 Internal Combustion Engine (ICE) Vehicles Battery & Hybrid Electric Vehicles • User Interface • User Interface • Interior & Exterior Lighting • Interior & Exterior Lighting • Sensors • Sensors
Slide 12: EV Solutions for the "Top Hat"
EV Solutions for the “Top Hat” LED Lighting (Interior & Exterior) Sensors & Cameras Switches & Touchscreens Charging Port Sub-System By-Wire Controls Shift-by-Wire Steer-by-Wire 12 Leveraging User Interface, Lighting & Sensor Toolbox
Slide 13: EV Solutions for the "Skateboard"
EV Solutions for the “Skateboard” Inverter & Molded Busbar Battery Charger Sub-Assemblies Monitoring Current Sensors Electric Sensors Motors Position & Torque Sensors Busbars & Power Connectors Battery Battery Disconnect & Module Power Distribution Connections Busbars & Connectors BDU PDU 13 Leverag
Slide 14: 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 15: 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 16: 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 16
Slide 17: 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 17
Slide 18: 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 18
Slide 19: Medical
Solutions & Technologies Medical Brands Products Growth Drivers Customers 1 Pressure Injury Prevention 2 Aging Population 3 Rising Hospital Costs 4 Long-Term Care 19
Slide 20: Capital Allocation History and Strategy
Capital Allocation History and Strategy ($ in millions) Share Purchases $72 Dividends Paid $75 10%: Returning Capital Balanced Capital to Shareholders Allocation Strategy Debt Reduction $348 25%: Deleveraging ➢ Pay Down Debt when Appropriate Balance Sheet ➢ Return Capital to Shareholders via R&D $17
Slide 21: 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 $102 100 0.30 80 60 0.20 40 0.10 20 0 0.00 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 21 Cons
Slide 22: Deleveraging Balance Sheet
Deleveraging Balance Sheet ($ in millions) Net Debt $246.7 $229.2 $209.4 $209.3 $179.5 $177.1 $134.8 $138.8 $105.3 $25.9 FY19 Q2 FY19 Q3 FY19 Q4 FY20 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY21 Q1 FY21 Q2 FY21 Q3 ➢ Deleveraging Since Grakon Acquisition in FY19 Q2 ➢ Net Debt / TTM EBITDA* of 0.1 at End of FY21 Q
Slide 23: 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 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
Appendix TOTAL GROSS DEBT/EBITDA (Dollars in Millions) LTM January 30 2021 Net Income $ 121.3 Income Tax Expense 17.2 Interest Expense, Net 6.4 Amortization of Intangibles 19.2 Depreciation 31.3 EBITDA $ 195.4 Short-term Debt 15.4 Long-term Debt 229.2 Gross Debt $ 244.6 Total Gross Debt/EBITDA 1.3 T
Methode Electronics — Stifel 2021 Virtual Cross Sector Insight Conference on 6ix