June 19, 2019 FISCAL 2019 FOURTH-QUARTER AND FULL-YEAR FINANCIAL RESULTS
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 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 press release 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, commercial vehicle, computer and communications industries; (3) international trade disputes resulting in tariffs: (4) changes in U.S. trade policy; (5) success of Pacific Insight, Procoplast and Grakon and/or our ability to implement and profit from new applications of the acquired technology; (6) ability to successfully benefit from acquisitions and divestitures; (7) customary risks related to conducting global operations; (8) significant adjustments to expense based on the probability of meeting certain performance levels in our long-term incentive plan; (9) recognition of goodwill impairment charges; (10) ability to keep pace with rapid technological changes; (11) ability to withstand business interruptions; (12) investment in programs prior to the recognition of revenue; (13) timing, quality and cost of new program launches; (14) ability to withstand price pressure, including pricing reductions; (15) currency fluctuations; (16) ability to successfully market and sell Dabir Surfaces products; (17) dependence on our supply chain; (18) dependence on the availability and price of materials; (19) income tax rate fluctuations; (20) fluctuations in our gross margins; (21) breach of our information technology systems; (22) ability to avoid design or manufacturing defects; (23) ability to compete effectively; (24) ability to protect our intellectual property; (25) debt levels and the effect on operations and liquidity; and (26) costs and expenses due to regulations regarding conflict minerals. 2
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 included in this presentation are provided in the presentation. Methode's definitions of these non-GAAP measures may differ from similarly titled measures used by others. These non-GAAP measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. The Company believes that these non-GAAP measures are useful because they (i) provide both management and investors meaningful supplemental information regarding financial performance by excluding certain expenses that may not be indicative of recurring core business operating results, (ii) permit investors to view Methode's performance using the same tools that management uses to evaluate its past performance, reportable business segments and prospects for future performance and (iii) otherwise provide supplemental information that may be useful to investors in evaluating Methode. 3
FY19 Highlights and Path for Growth Safety and ADAS Transformation Magneto-elastic sensing Grakon acquisition solidifies Industrial segment RGB LED based ambient and direct lighting New end markets Exterior lighting capabilities support Advanced Driver Reduce Automotive market concentration Assistance Systems $1 Billion in Revenue Further Penetration of EV Market Combining expertise in both power distribution and Despite passenger car and tariff headwinds Automotive manufacturing “One-stop shop” for LED lighting solutions, Innovation will bring both increased market penetration integrated user interfaces and sensors and content per vehicle Dabir Development $1M revenue milestone Surface revenue growth over last year 4
Q4 and FY19 Highlights* (All Numbers In Millions except percentages) Sales Adjusted Income Adjusted Gross Growth From Operations Margins YoY YoY YoY FY 18 FY 19 Change FY 18 FY 19 Change FY 18 FY 19 Change Q4 $249.0 $266.0 6.8% $27.6 $34.1 23.6% 24.9% 27.0% 210 bp Full $908.3 $ 1000.3 10.1% $119.1 $136.5 14.6% 26.5% 27.5% 100 bp Year *See Appendix for reconciliation to GAAP 5
Q4 Sales Drivers (Dollars In Millions) Effect of Delayed Sales from Appliance Reduced Effect of Sales from FY19 Q4 FY18 Q4 Effect of ASC New Program Start Automotive Weaker Euro Acquisition Sales Sales 606 on Sales Launches and Reduced Volumes and RMB Data Sales Volumes 6
Full-Year Sales Drivers (Dollars In Millions) Effect of Delayed Improvement Sales from Reduced Effect of Appliance Sales from in Power Effect of ASC FY19 Sales New Automotive Weaker Euro FY18 Sales Program Start Acquisitions Products and 606 on Sales Launches and RMB Volumes and Reduced Hetronics Data Sales Businesses Volumes 7
Medical Segment Dabir Achieves $1M Revenue in FY19 Surfaces Revenue Surfaces Sold Average Evaluation Time (days) 462 $600,000 500 450 85 $476,784 90 $500,000 400 80 69 350 $400,000 70 300 60 $300,000 250 50 200 40 $200,000 150 30 79 100 $64,400 20 $100,000 50 10 $0 0 0 FY18 FY19 FY18 FY19 FY18 FY19 8
Bridge FY19 Guidance to FY 19 Results (All Numbers In Millions, Except Per Share Amounts) Pre-Tax Income Sales at Lower End of Tariff Mitigation Efforts and FY19 Guidance Midpoint FY19 Actual Guidance Range Currency Headwinds EPS $2.59 Tariff Mitigation Impact of Lower Efforts and FY19 Guidance Sales at Lower End of Investment Tax FY19 Actual Currency Midpoint Guidance Range Credit Headwinds 9
Q4 and Full-Year FY19 Financial Results* Adjusted Gross Margins Adjusted S&A 27.5% 27.0% 13.0% 26.5% 12.7% 12.3% 24.9% 11.5% Q4 FY18 Q4 FY19 FY 18 FY 19 Q4 FY18 Q4 FY19 FY 18 FY 19 • • Excludes Excludes • • Excludes Excludes • • Initiatives to reduce Initiatives to reduce • • Acquisition-related Acquisition-related costs and improve costs and improve costs costs profitability profitability • • Initiatives to reduce Initiatives to reduce • Purchase accounting costs and improve costs and improve adjustments profitability profitability • Long-term incentive plan accrual adjustments *See Appendix for reconciliation to GAAP 10
Q4 and Full-Year FY19 Financial Results (Dollars In Millions) EBITDA Adjusted EBITDA $184.9 $155.2 $153.6 $152.8 $47.2 $46.1 $39.5 $39.5 Q4 FY18 Q4 FY19 FY18 FY19 Q4 FY18 Q4 FY19 FY18 FY19 • Excludes • Excludes • • Initiatives to reduce Initiatives to reduce costs and improve costs and improve operational operational profitability profitability • • Acquisition-related Acquisition-related costs costs • Long-term incentive plan accrual adjustments *See Appendix for reconciliation to GAAP 11
Free Cash Flow and Balance Sheet (Dollars In Millions) 12 Months 12 Months FY19 FCF April 28, 2018 April 27, 2019 $85.1M Net Income $57.2 $91.6 Depreciation and 28.1 43.3 Amortization CapEx (47.7) (49.8) Debt to TTM FCF $37.6 $85.1 EBITDA 1.66X 12
FY2020 Guidance $48-$54M $1.13-1.17B CapEx Revenue $51-$54M $150.3-164.3M Depreciation and Amortization Pre-Tax Income 18-21% $3.25-$3.55 Income Tax Rate EPS $122-$136M Free Cash Flow 13
Determining Projected FY20 EBITDA (Dollars In Millions) Launches: Decreased from $24M • New Ford Integrated estimate at end of Q3 FY19 due Tailgate Module and to increased tariffs on Overhead Consoles imported Chinese goods programs • Laundry platform • New E-bike programs EBITDA of New EBITDA of Additional FY19 Acquisition Benefit of Effect of Reduced Automotive and Grakon Revenues FY20 EBITDA and Initiatives to FY19 EBITDA Passenger Car Laundry (From Additional 4 1/2 Restructuring Projection Reduce Costs Production Months of Ownership) Launches Costs 14
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