Baird’s 2019 Global Industrial Conference November 5, 2019 Don Duda, CEO Ron Tsoumas, CFO Mark Shermetaro, VP Corporate Development
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. Methode undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in Methode's expectations on a quarterly basis or otherwise. The forward-looking statements in this presentation involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in Methode's filings with the Securities and Exchange Commission. Such factors may include, without limitation, the following: (1) dependence on a small number of large customers, including two large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and communications industries; (3) international trade disputes resulting in tariffs and our ability to mitigate tariffs: (4) timing, quality and cost of new program launches; (5) ability to withstand price pressure, including pricing reductions; (6) ability to successfully market and sell Dabir Surfaces products; (7) currency fluctuations; (8) customary risks related to conducting global operations; (9) ability to withstand business interruptions; (10) recognition of goodwill impairment charges; (11) ability to successfully benefit from acquisitions and divestitures; (12) investment in programs prior to the recognition of revenue; (13) dependence on the availability and price of materials; (14) fluctuations in our gross margins; (15) dependence on our supply chain; (16) income tax rate fluctuations; (17) ability to keep pace with rapid technological changes; (18) breach of our information technology systems; (19) ability to avoid design or manufacturing defects; (20) ability to compete effectively; (21) ability to protect our intellectual property; (22) success of Grakon and/or our ability to implement and profit from new applications of the acquired technology; (23) significant adjustments to expense based on the probability of meeting certain performance levels in our long-term incentive plan; and (24) costs and expenses due to regulations regarding conflict minerals. 2
Methode is … 10-year 788 patents Leading developer and 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 Medical markets. EBITDA Automotive Europe growth CAGR 69% 23% Asia Interface of 21.4% North 9% 5% America 68% Industrial Medical 26% Device 3
Methode’s reporting segments are… Medical Automotive Interface Industrial TECHNOLOGY ENGINEERING MANUFACTURING 4
Leading, Patented Technology Solutions COMPLEX INSERT MOLDED AUTOMOTIVE INTERIOR AUTOMOTIVE EXTERIOR LIGHTING ELECTRIC VEHICLE Transmission Controller Headlamp Switches Gesture/Touch Tailgate Emblem Sill Plates Intelligent Battery Connection Steering Wheel Switches Integrated Tailgate Module Flood Lighting (Lead Frame) Battery Bus Bar Connections Window Switches Advanced Illumination Ambient Lighting Engine Control Units Battery Disconnect Unit Ignition Switch Touchpads In-glass Messaging Material Illumination PowerBud Connectors Anti-Lock Braking Assemblies Rear Seat Controls Keyless Entry Reading / Dome Lamps Insert Molded Bus-bar/Carriers Pedal Assemblies Overhead Consoles Handle-free Door Solution Seat Illumination Powder Coated Bus Bar Touchscreens Side Mirror Projection Full Color Spectrum Door Latch Actuator Flexible Bus Bar Center-stacks Holographic Lighting Horn Contact Unit Laminated Bus Bar Transmission Solenoid Connector Center Console Switches Anti-roll Stability Sensor J1772 Charging Connector Smart Knobs Smart Towing Sensor Transmission Position Sensor Rotary Position Sensor Assembly Decorating Electronics Metal Plastic Testing
Growing Content Per Vehicle Ford Explorer Electric SUV $75 $228 • Integrated Center Panel • Ignition Switch • • Numerous interior lamps Brake Switch • IP Switches • Overhead Console • Ambient Lighting 6
Growing Content Per Vehicle For a major EV manufacturer, we have engineered LED lighting and power solutions on their first platform, and since then moved across all their platforms with content ranging from approximately $160 to $300 dollars per vehicle. 7
Methode Outperformed the Market Automotive Industry Volumes Versus Methode’s Automotive Sales Global NA Europe China • Grakon auto sales in NA 20% • Strong mix of products for SUVs and 17.1% 15% pickup trucks in NA 10% 8.0% • 6 launches - 3 in NA, 3 in Europe 5% • Limited exposure to domestic Chinese 0% automotive OEMs -0.6% -2.2% -5% • Methode Asia affected by passenger -6.6% -10% -10.1% car slowdown and price downs -15% • New product launches during FY 20 -17.5% -20% -18.7% should further help offset headwinds -25% + CY Q2 19 MEI Q1 FY20* *Excludes impact of currency + Source , Ward’s, JD Power, ACEA 8
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 Switch Interior Task Lighting Integrated Controller and Remote Control For Locomotives Power Cable Solutions RV Tank Level and Monitor Storage Lighting Rf E-stop Thermal Solutions Marine High Water Alarm Safety Lighting Weight Sensor (Magneto-elastic) PowerBud Connectors Battery Electrolyte Level Sensor Signal / Marker Lighting Electromechanical and Remote Control Retrofit Kits Open Compute Connector Work / Task Lighting Batteries and Chargers PowerRail Lighting Control Modules Accessories (Straps, Belts, Vests, Etc.) Assembly Decorating Electronics Metal Plastic Testing
Strong Product Development Heritage ICS With Touch Controls ICS With Touchscreen Multimedia Controller Integrated Tailgate Overhead Module Pressure Injury Prevention Overlay Console 10
Leading, Patented Technology Solutions… • Innovative technology for pressure injury prevention • Clinically shown to reduce pressure injuries in surgical cases • Converts standard hospital or home bed to “specialty” bed Dabir Surgical System Dabir Gen2 Controller • Suitable for use across the continuum of care Controller Interconnect • Improves patient comfort and is well accepted by clinical staff • New Dabir Gen2 (compact) system delivers greater flexibility outside surgical environment 11
Global Manufacturing Footprint LONTZEN, BELGIUM MRIEHEL, 155,000 Sq Ft SHANGHAI, MALTA ONTARIO, CHICAGO, IL 110 Employees CHINA 299,000 Sq Ft CANADA 195,000 Sq Ft 1,330 Employees 35,000 Sq Ft 566 Employees 110 Employees OKLAHOMA CITY,OK DONGGUAN, CHINA MONTERREY, MEXICO NASR, EGYPT 197,000 Sq Ft 287,000 Sq Ft FRESNILLO, 121,000 Sq FT 950 Employees 1,180 Employees MEXICO 530 Employees and 120,000 Sq Ft 128,000 Sq Ft 930 Workers 830 Employees In CHICAGO: Harwood Heights – Dabir 40,000 Sq Ft 55 Employees Rolling Meadows – PSG 52,000 Sq Ft 140 Employees 12
Global Sales and Engineering Centers NELSON, CANADA BURNLEY, U.K. DETROIT, MICHIGAN SEATTLE, GAU-ALGESHEIM & WASHINGTON MUNICH, GERMANY *CHICAGO, IL* SAN JOSE, TOKYO, JAPAN OKLAHOMA CITY, OK BEIRUT, LEBANON CALIFORNIA MRIEHEL, SHANGHAI, CHINA MALTA SHENZEN, CHINA BANGALORE, INDIA * In CHICAGO, IL: HARWOOD HEIGHTS ROLLING MEADOWS 13
An Enviable Customer List 14
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 systems Infotainment Renewables Digital Bandwidth demand > > Wellness (IoT, 5G) > ADAS / Autonomous Commercial Vehicle driver > > (need of sensors) shortage Affordable Care Act – pay Product design – brand > > for outcomes vs. differentiation ADAS / Autonomous > treatment (need of sensors) Tele-medicine / homecare > Driver and worker safety > IoT > 15
Sensing Technology Organic Product Growth FY 2018 FY 2019 FY 2020 (est.) FY 2021 (est.) FY 2022 (est.) 16 *Booked business as of 7/19
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% 17
Strong Cash Flow and Balance Sheet Free Cash Flow *± $150 $100 $130 $123 $50 $88 $84 $85 $0 FY2016 FY2017 FY2018 FY 2019 FY 2020** * Millions 18 ± Adjusted, Net Income + Depreciation + Amortization - CapEx ** Estimate
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