DB Global Auto Industry Conference January 13, 2015
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 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 as our annual and quarterly reports. 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, computer and communications industries; (3) investment in programs prior to the recognition of revenue; (4) timing, volume, quality and cost of new program launches; (5) ability to withstand price pressure; (6) dependence on our supply chain; (7) dependence on the availability and price of raw materials; (8) customary risks related to conducting global operations; (9) currency fluctuations; (10) income tax rate fluctuations; (11) fluctuations in our gross margins; (12) the recognition of goodwill impairment charges; (13) ability to keep pace with rapid technological changes; (14) location of a significant amount of cash outside of the U.S.; (15) ability to successfully benefit from acquisitions and divestitures; (16) ability to avoid design or manufacturing defects; (17) ability to protect our intellectual property; (18) ability to compete effectively; (19) ability to withstand business interruptions; (20) a breach of our information technology systems; and (21) costs and expenses due to regulations regarding conflict minerals. 2
Methode’s Core Strategy Design and engineer products that incorporate Methode’s broad range of field-proven technologies and utilize our global manufacturing capabilities to deliver unique solutions that provide genuine value for our customers and higher margins for our shareholders. 4
Portfolio of Strong, Global Businesses FY14 14 Re Reve venue o of $77 $772M Seg Segment Sa Sales Manufacturin ring L Locatio ion S Sale les ROW, ROW , 4% 4% Asia ia Interf rface ce 13% 13% Power wer 22% 22% Prod oduct cts 9% 9% Other er Europ rope Nort rth 1% 1% 24% 24% Ameri rica ca Auto tomotiv tive 59% 59% 68% 68% 5
Competitive Advantages Field-proven technologies provide solutions for our Over er 290 290 paten ents customers and competitive advantage to Methode Vertical integration and Low defective part arts per millio illion/ H / High on on-tim ime continuous improvement of deliv livery manufacturing systems Global manufacturing footprint 3 prim 3 rimar ary y man anufac acturi ring with regional design and campuses es engineering capabilities Successful launc nch h of Seasoned launch and design lar large pro rogram ams f for r General M Mot otor ors, For ord d , , teams Whirlp irlpool l and d ot others 6
Strong Financial Results Sales es *+ EPS PS + EBIT ITDA DA *+ 22% CA 22% CAGR 53% CA 53% CAGR 41% 41% CA CAGR $900 $9 $2 $2.00 00 $1 $120.0 $1. $1.75 $773 $773 $1 $1.80 80 $98. $98.9 $8 $800 $100.0 $1 $1 $1.60 60 $700 $7 $1.40 $1 40 $6 $600 $80.0 $8 $520 $520 $1 $1.20 20 $428 $465 $465 $500 $5 $428 $1.00 $1 00 $6 $60.0 $400 $4 $41.3 $41. $0.80 $0 80 $35.4 $35. $300 $3 $40.0 $4 $0.49 $0. $0. $0.46 $27.5 $27. $0.60 $0 60 $2 $200 $0 $0.40 40 $0. $0.22 $2 $20.0 $100 $1 $0 $0.20 20 $0 $0 $0 $0.00 00 $0. 0.0 FY11 11 FY12 12 FY13 13 FY14 14 FY11 11 FY12 12 FY13 13 FY14 14 FY11 11 FY12 12 FY13 13 FY14 14 * In millions 7 + See Non-GAAP reconciliation on Website
Strong Financial Results FY1 FY14 V Versus P Prior Ye Year ar Sales grew nearly 49% Non-GAAP EPS grew 280%* Operating margin improved to 9.5% from 2.5% SG&A as a percentage of revenues decreased to 10.3% from 12.8% Strong expense leverage Increased manufacturing efficiencies due to vertical integration Favorable raw material pricing and product mix in Power Products Lower than anticipated scrap on General Motors K2xx programs * Adjusted for the U.S. deferred tax valuation allowance release and other discrete tax adjustments, the gain related to the sale of Lumidigm in Fiscal 2014, the Malta valuation allowance adjustments and the goodwill and intangible asset impairment charges in Fiscals 2014 and 2013, and the gain recorded in connection with a legal settlement in Fiscal 2013. 8
Strong Financial Results FY1 FY15 Q2 Vers ersus P Prio rior Ye Year ar Sales grew 20% Income from operations grew 60% EPS increased 29% despite higher income tax rate Consolidated gross margins improved to 26.2% from 21.7% Operating margin improved to 15% from 11% Fiscal 2015 guidance Sales of $870 to $885 million Income from operations of $114 to $120 million EPS of $2.20 to $2.30 9
Financial Strength Strong balance sheet with ~ $234 million in net cash and credit availability* Dividend paid for over 30 years Current dividend yield of 1.0%± FY15 free cash flow estimated between $89M and $93M Named one of America’s Most Trustworthy Companies by Forbes in 2012 and 2013 As of January 7, 2015 * As of December 11, 2014 10 10 ±
Automotive Solutions
Well Positioned Product Portfolio FY14 14 A Autom tomot otive ve Sales o of $522m Trans nsmissi sion 11% 11% Other er 3% 3% Integ egrated ed Center Hid idden Switc itches Stack ck 12% 12% 51% 51% Ergon onom omic c Switc itches Steering 17% 17% Angle e Senso nsor 6% 6% 12 12
Integrated Center Consoles Ford - MyFord & MyLincoln North American OEM Touch 2 program launching FY17 2011-2015 MKX, Edge, SUV program launching in FY18 Explorer Fiat Alpha 2013-2017 Taurus, Flex, Launching FY18 MKS, MKT Aston Martin General Motors K2xx and 31xx Launching FY17 2014-2019 Tahoe, Yukon, Major competitors Silverado, Sierra, Suburban, Preh Alpine Yukon XL TRW Delphi 2015-2021 Canyon, Colorado Kostal Panasonic Renault First high-volume in Europe launching FY16 13 13
What’s Next? SmartCenter Stack One complete system includes Integrated center stack Wired/wireless cell phone connection Video screen Audio Capacitive touch screen Tactile knobs/buttons Utilize operator’s cell phone as media server and duplicates phone functionality through vehicle touchscreen Advantages Reduces discrete modules, vehicle cabling Single source for all HMI functions Earliest deployment FY18 14 14
Transmission Solutions Lead Fr ad Fram ame GM T76 T76 Lea ead Frame Integrated power and signal distribution backbone for transmission controller Customers - General Motors, Ford, Volkswagen Clu lutch P Pla late Posit ition S Sen ensor Clu lutch P Plat late P Posit itio ion Sensor First deployment of patented Magneto-elastic technology in transmission Deployed in new generation of fuel efficient, dual clutch transmissions 15 15
What’s Next? Transmission Torque Measurement Acti tive a and A Absol olute te N Non on-Co Cont ntact cting ng T Torque ue Sens nsor Patented Magneto-elastic Metho hode de’s technology Magnet eto- Chara ract cteri ristic Toda day ela lasti tic Outputs instantaneous and Tech chnol olog ogy very precise torque To Torque cal calcu culated b by Estimation Measurement measurement Compl pletely ly r real ti time me No Yes Allows automakers the ability Accuracy i acy invar arian ant t to No Yes temp te mperatu ture a and alti titude to measure real-time torque Accuracy o acy of i initial al Sufficient Excellent vs. elaborate algorithms that calibra ibration m maintain ined d over ti ov time me only estimate torque Cal Calibrat ation accu accuracy i in Very good Excellent Currently being prototyped car cars and tested with several Calibrat Cal ation accu accuracy i in Sufficient Excellent tru rucks a and d SU SUVs automotive OEMs Smooth moothness of of shift Sufficient Excellent Earliest deployment FY18 16 16
Torque Sensor for Active Roll Stabilization Schaeffler award for torque sensor to measure the “roll” in AR ARS S Syst ystem vehicles during cornering Control system Replaces exiting hydraulic Planetary gear and motor systems to give better vehicle handling, lower emissions Precision sensor designed for safety applications Sensor is housed in the flange Schaeffler plans to introduce to at the base of the stabilization bar. other customers Estimated award life of 10 years Initially being sold into luxury and performance cars 17 17
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