Slide 1: Fiscal 2020 Third Quarter Financial Results
March 5, 2020 FISCAL 2020 THIRD QUARTER FINANCIAL RESULTS
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: Use of Non-GAAP Financial Measures
Use of 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 measures. Reconciliation to the nearest GAAP measures of all non-GAAP measures inclu
Slide 4: FY20 YTD Highlights
FY20 YTD Highlights1, 2 (Dollars in Millions except per share amount; FY20 results include 40 weeks and FY19 results include 39 weeks) Adjusted Diluted Adjusted Net Diluted Sales Net Income Earnings Income Earnings Per Per Share Share YoY YoY YoY YoY YoY FY 19 FY 20 FY 19 FY 20 FY 19 FY 20 FY 19 FY
Slide 5: YTD Sales Drivers
YTD Sales Drivers (Dollars in Millions; FY20 results include 40 weeks and FY19 results include 39 weeks) $900 $92 $42 $813 $800 $734 -$10 -$6 -$10 -$29 $700 $600 $500 $400 $300 $200 $100 $0 On going Radio Remote Control, YTD FY19 Q3 Incremental Impact from Sales from Effect of YTD FY20 Q3 Weaker Aut
Slide 6: FY20 Financial Guidance Reaffirmed
FY20 Financial Guidance Reaffirmed $1.10-1.13B $150.3-164.3M $3.25-$3.55 Revenue Pre-Tax Income EPS $122-$136M Free Cash Flow* * Net Income + Depreciation and Amortization minus Cap-Ex 6
Slide 7: Q3 Business Awards – totals $29 M
Q3 Business Awards – totals $29 M • Torque Sensor & Complex-Insert-Molded Assembly for ATV power steering system - $12.0 M annually • Incremental application of a Steering Angle Sensor - $4.0 M annually • Incremental application of a Door Activation Switch for an EV vehicle - $1.5 M annually • Puddl
Slide 8: New & Expanded Engineering Center in India
New & Expanded Engineering Center in India • Methode has completed construction and moved into its new 50,000 sq. ft. engineering center in Bangalore, India • Currently houses approximately 165 employees with capacity to support future growth • Added additional product testing capabilities 8
Slide 9: Q3 FY20 Highlights and Path for Growth
Q3 FY20 Highlights and Path for Growth Global Auto Sensor Growth Strong mix of products for SUVs and trucks Magneto-elastic and eddy current sensing continues E-bike growth continues Limited exposure to domestic Chinese Tow Load application development continues automotive OEMs Operational Efficienc
Slide 10: FY20 Q3 Highlights
FY20 Q3 Highlights1 (Dollars in Millions except per share amount; FY20 results include 14 weeks and FY19 results include 13 weeks) Adjusted Diluted Adjusted Net Diluted Sales Net Income Earnings Income Earnings Per Per Share Share YoY YoY YoY YoY YoY FY 19 FY 20 FY 19 FY 20 FY 19 FY 20 FY 19 FY 20 F
Slide 11: Q3 FY20 Financial Results
Q3 FY20 Financial Results* Gross Margins Adjusted Gross Margins S&A Adjusted S&A • Benefit of increased automotive Excludes: • Lower expenses for initiatives to reduce Excludes: segment sales • Expense for initiatives to costs and improve operational • Expense for initiatives to reduce costs and imp
Slide 12: YTD FY20 Financial Results
YTD FY20 Financial Results* Gross Margins Adjusted Gross Margins S&A Adjusted S&A • Benefit of Grakon sales Excludes: • Lower expense for initiatives to reduce Excludes: • Expense for initiatives to costs and improve operational • Expense for initiatives to • Benefit of increased sensor sales reduce
Slide 13: Q3 FY20 Financial Results (EBITDA)
Q3 FY20 Financial Results* (Dollars in Millions) EBITDA Adjusted EBITDA Excludes: • Expense for initiatives to reduce costs and improve operational profitability • Acquisition-related expenses 36% 21% 58.7** $59.8 $49.5 $43.1 Q3 FY19 Q3 FY20 Q3 FY19 Q3 FY20 * See Appendix for reconciliation to GAAP
Slide 14: YTD FY20 Financial Results (EBITDA)
YTD FY20 Financial Results* (Dollars in Millions) EBITDA Adjusted EBITDA Excludes: • Expense for initiatives to reduce costs and improve operational profitability • Acquisition-related expenses • Stock-based compensation accrual adjustment 40% 12% $152.6 ** $154.2 ** $137.6 $109.1 YTD FY19 YTD FY20
Slide 15: Free Cash Flow (FCF)
Free Cash Flow (FCF)* (Dollars in Millions) 9 Months 9 Months Jan 26, 2019 Feb 1, 2020 Net Income $69.0 $93.3 YTD FY2020 Depreciation and 30.6 36.0 FCF Amortization $94.4M CapEx (37.0) (34.9) FCF $62.6 $94.4 * See Appendix for reconciliation to GAAP 15
Slide 16: Deleveraging Since Grakon Acquisition in Q3 FY19
Deleveraging Since Grakon Acquisition in Q3 FY19 (Dollars in Millions) Gross Debt / TTM EBITDA Ratio* is 1.3 at end of Q3 FY20 Gross Debt and Net Debt $357.6 $302.9 $292.6 $283.1 $275.1 $257.0 $246.7 $229.2 $209.4 $209.3 $179.5 $177.1 Q2 FY19 Q2 FY19 Q3 FY19 Q3 FY19 Q4 FY19 Q4 FY19 Q1 FY20 Q1 FY20 Q
Slide 17: Determining Projected FY20 EBITDA
Determining Projected FY20 EBITDA (Dollars in Millions) $29 $221 $4 $7 $11 $16 $12 $25 2Q Impact ($10M) 3Q & 4Q Replenishment $1M, Cost Reduction Actions $2M $155 FY19 EBITDA Grakon Auto & Laund ry FY19 I nitiatives to FY19 Acq & Incremental UAW lab or s trike Weaker Car FY20 P rojected Performance
Slide 18: Appendix: Non-GAAP Financial Measures
Appendix Non-GAAP Financial Measures To supplement the Company's financial statements presented in accordance with generally accepted accounting principles in the United States (“GAAP”), Methode uses Adjusted Net Income, Adjusted Earnings Per Share, Adjusted Income from Operations, Adjusted Gross Pr
Slide 19: Appendix: Reconciliation, Three Months Ended Feb 1, 2020
Appendix METHODE ELECTRONICS, INC. AND SUBSIDIARIES ($ in millions, except per share data) Reconciliation of Non-GAAP Financial Measures for the Three Months Ended February 1, 2020 (14 weeks) 19
Slide 20: Appendix: Reconciliation, Three Months Ended Jan 26, 2019
Appendix METHODE ELECTRONICS, INC. AND SUBSIDIARIES ($ in millions, except per share data) Reconciliation of Non-GAAP Financial Measures for the Three Months Ended January 26, 2019 (13 weeks) 20
Slide 21: Appendix: Reconciliation, Nine Months Ended Feb 1, 2020
Appendix METHODE ELECTRONICS, INC. AND SUBSIDIARIES ($ in millions, except per share data) Reconciliation of Non-GAAP Financial Measures for the Nine Months Ended February 1, 2020 (40 weeks) 21
Slide 22: Appendix: Reconciliation, Nine Months Ended Jan 26, 2019
Appendix METHODE ELECTRONICS, INC. AND SUBSIDIARIES ($ in millions, except per share data) Reconciliation of Non-GAAP Financial Measures for the Nine Months Ended January 26, 2019 (39 weeks) 22
Slide 23: Reconciliation of EBITDA and Adjusted EBITDA to Net Income
Appendix METHODE ELECTRONICS, INC. AND SUBSIDIARIES ($ in millions) Reconciliation of EBITDA and Adjusted EBITDA to Net Income 23
Slide 24: Reconciliation of Free Cash Flow to Net Income
Appendix METHODE ELECTRONICS, INC. AND SUBSIDIARIES ($ in millions) Reconciliation of Free Cash Flow to Net Income 24
Slide 25: Thank you
AETHODE ELECTRONICS Thank you