Methode Presentation


Transcript of Methode Presentation

Page 1: Methode Presentation
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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) ability to withstand price pressure; (5) timing, volume, quality and cost of new program launches; (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.

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Investment Appeals

• Portfolio of products and solutions in several growing end markets

• Opportunities for expansion into additional end markets• Global engineering, design and manufacturing• Unique patented technologies – strong product development

heritage• Seasoned management team with a track record of growing

revenue and earnings• Strong balance sheet with sufficient liquidity to fund growth

organically and through acquisition• Targeting 5-year compounded EBITDA growth rate of 9-10%• Share repurchase plan up to $100 million and quarterly

dividend of $0.09

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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.

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Portfolio of Strong, Global Businesses





Power Products


Segment Sales

North America




Manufacturing Location Sales

FY15 Revenue of $881m

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Field-Proven Technologies

Competitive Advantages

Vertical Integration

Global Manufacturing Footprint

Seasoned Launch and Design Teams

• Provide innovative solutions for our customers and competitive advantage to Methode

• Over 290 patents

• Provide innovative solutions for our customers and competitive advantage to Methode

• Over 290 patents

• Provides continuous improvement of manufacturing systems

• Reduces reliance on suppliers• Demonstrated improvement in quality

• Provides continuous improvement of manufacturing systems

• Reduces reliance on suppliers• Demonstrated improvement in quality

• Regional design and engineering capabilities• 3 primary manufacturing campuses• Lean and continuous improvement philosophy• Identical systems used globally

• Successful launch of large programs for General Motors, Ford, Whirlpool and others

• Low defective parts per million• High on-time delivery• Utilizes Methode’s proven manufacturing system

• Successful launch of large programs for General Motors, Ford, Whirlpool and others

• Low defective parts per million• High on-time delivery• Utilizes Methode’s proven manufacturing system

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Strong Long-Term Performance












77% 78%




Methode Electronics Russell 2000 Index S&P 500 Index

Methode’s Stock Has Outperformedthe Russell 2000 and the S&P 500

in 3, 5 and 10 Year Periods*+

*Source S&P Capital IQ+As of 9/21/15

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Strong Financial Results

* In millions+ See Non-GAAP reconciliation on Website




































20% CAGR 49% CAGR 43% CAGR

FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15

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Fiscal 2015

Strong Financial Results

• Sales, income from operations and EPS highest in Company’s history

• Consolidated gross margin improved 450 basis points over FY14

• Operating margin increased to 14% from 9.7% in FY14*

• Income from operations grew 63.7% to $123.3m*

• EPS of $2.44 compared to $1.62 in FY14*

* See Website for Non-GAAP reconciliation

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Fiscal 2016 Outlook

Fiscal 2016• Guidance – Expect 2nd best year in company history

Sales ─ $830-$865m Operating income ─ $108-$119m EPS ─ $2.07-$2.22 Operating margin ─ 13%-13.8%

• Sales and income expected to be lower year over year due to Ford center console program going end of life Price concessions in Automotive Reduced appliance sales Lower Big Data product sales in Power Products Sale of Trace Laboratories

• Strong balance sheet with ~ $265M in net cash and credit availability+

• FY16 free cash flow estimate of $80M-$90M+ As of August 1, 2015

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Automotive Solutions

Integrated Center Console



Hidden Switches14%

Ergonomic Switches



Steering Angle Sensor


FY15 Revenue of $628m

GM Yukon Integrated Center Console

Transmission Lead Frame

Transmission Sensor

FCA Floor Console Multi-Media Interface

McLaren ICP

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Integrated Center Console

Automotive Milestones

• Ford - 2011-2015 MKX, Edge, Explorer and 2013-2017 Taurus, Flex, MKS, MKT

• General Motors - 2014-2019 Tahoe, Yukon, Silverado, Sierra, Suburban, Yukon XL and 2015-2021 Canyon, Colorado

• Renault – Launching FY16• General Motors - 2 programs launching

FY17 and 1 launching in FY18• Fiat - Launching FY18• Aston Martin - Launching FY17• North American OEM - next generation

of existing program with this customer

Transmission Solutions• Lead Frame

Integrated power and signal distribution backbone for transmission controller

Customers - General Motors, Ford, Volkswagen

• Clutch Plate Position Sensor First deployment of patented

Magneto-elastic technology in transmission

Deployed in new generation of fuel efficient, dual-clutch transmissions

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Torque Sensor for Active Role Stabilization

Automotive Milestones

• Schaeffler/BMW selected Methode’s torque sensor to measure “roll” in vehicles during cornering

• Replaces existing hydraulic systems to give better vehicle handling, greener

• Precision sensor designed for safety applications

• Schaeffler plans to introduce to other customers

• Estimated award life of 10 years• Initial launch on BMW 7-series

Hidden and Ergonomic Switches

• Hidden switch global market share of 18%

• Hidden switch European Union market share of 35%

• Fully automated production• Vertically integrated plants

Molding Decorative finishes Stamping

• ~40 million switches produced annually

• Launched the first volumes of the Integrated Tail gate module

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Interface Solutions

Consumer Touch Panels


Industrial Solutions


Data Center Infrastructure



FY15 Revenue of $162m

Touch Control Panels for Whirlpool Washer & Dryer

Hetronic RadioRemote Control

Food Service Equipment


Agricultural Tractors

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Consumer Touch Panels

Interface Milestones

• TouchSensor’s user interfaces found on over 30% of commercial/industrial solid-state touch interfaces in North America

• Integrate touch, LED’s, displays and decorative fascia into one sub-assembly

• Discrete key designs as well as high-resolution LCD touchscreens• Found on the following brands

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Interface Milestones

Industrial User Interfaces• Radio Remote Control Solutions• Custom engineered control solutions for industrial machinery and

equipment – to provide safety and improved efficiency• Pioneering data capture solutions for next generation of radio remote

control systems – more info for the user• Integration of HMI wireless and wired controls with sensor, hydraulic &

pneumatic components to expand applications• Proven expertise with over 300,000 global installations for:

Tower, crawler, all-terrain cranes Concrete pumps, material spreaders Material handling Drilling rigs Locomotives & railway support “Explosion proof” applications

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Data Center Infrastructure Solutions

Interface Milestones

• Supporting data and telecommunications industries Data Center Infrastructure

Management (DCIM) enabled cabinet (sensors and centralized data collection)

Fiber optic and copper cable assemblies

Intelligent power distribution, assurance & management devices

Largest customers – Hitachi Data Systems, Rackspace

• Lithium Ion Uninterruptable Power Supply – AC6000 Line interactive 6kw Uninterruptible

Power Supply (UPS) Utilizes years of research in battery

management systems Highest power density per UPS

footprint providing 6kw in 2 rack units

Enables peak shaving UL certification received Have sold over 30 units since

product launch in July 2015

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Bus Bars49%



Power Cabling7%

Thermal Mgmt5%

Power Products Solutions

FY15 Revenue of $86m

Electric Vehicle Coupler Connector

Bus Bar


SmartPower Stack™

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Bus Bars and Thermal


Power Products Milestones

• Integrated bus bar assemblies

• Fusion lug termination systems

• Patented, high-density power contact and connector systems

EV Bus Bar Assemblies

• Nissan Leaf North America and

Europe Connect lithium-ion

battery cells Each vehicle

requires 48 battery modules

Three Methode assemblies utilized on each battery module

• Tesla S


• Patented power-distribution system provides flexibility with multiple quick connect interconnect points

• Easily customized in lengths, number of rails, connect and disconnect options

• Adds flexibility and redundancy with easy hot pluggable add-ons

• Currently shipping to “Big Data” customer

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Methode’s Evolution

• SmartCenter Stack• Transmission Torque

Measurement• HighPerTouch™

• Digital Printing On Glass• Lean Touch™

• 10G Transceiver Modules• Bypass Switch• Radio Remote Control with

Video Feedback• Dabir Surfaces

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SmartCenter Stack

Methode’s Evolution

• One complete system - Integrated center stack, Video screen, Capacitive touch screen, Wired/wireless cell phone connection, Audio, Tactile knobs/buttons

• Operator’s cell phone acts as media server and duplicates phone functionality through vehicle touchscreen

• Single source for all HMI functions• Earliest deployment FY18

Transmission Torque Measurement

• Patented Magneto-elastic technology

• Outputs instantaneous and precise torque measurement

• Allows automakers ability to measure real-time torque vs. elaborate algorithms that only estimate torque

• Currently being prototyped and tested with several automotive OEMs

• Earliest deployment FY19

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Digital Printing on Glass• Replaces traditional screen printing

of decorative flat glass or plastic on user interface panels

• Utilizes 6-color, ultra-violet curable inks dispensed via large-scale, digital printer

• Superior resolution and graphic options

• Leans out supply chain and costly inventory

• Vertically integrated and in production today

Lean Touch ®

• Digital printing of graphics andcircuits via Methode Nano-particle conductive ink

• Replaces conventional printed circuit board

• Reduces inventory, lead-time and tooling (print on demand)

• Deployment late FY17

Methode’s Evolution

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• Provides significantly enhanced touch performance, enabling systems to sense touch… Through thicker substrates, about

8 times what a smartphone senses through

Through air gaps, which provide design freedom

Through thick gloves, key for many automotive and industrial applications

With water immunity, such as in automotive door handles

10G Copper Transceiver Modules

• Transceivers in data communications networks allow flexibility when connecting switches to other networking equipment

• More cost effective than optical counterparts

• Meets/exceeds industry low power requirement

• Launching FY17• Largest customer - Cisco

Methode’s Evolution

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Bypass Switch

• Patented “fast close switchgear” delivering safe and reliable circuit protection for high voltage, high current power management Initial application was off-shore

wind farm to on-shore power grid

Smaller, lighter and more flexible in design than current market alternatives

10,000+ in service today offering vital protection to power grid converter stations

Radio Remote Controlwith Video

• Full-color, transmissive 4.3 inch display and/or 8 inch “touch” displays integrated with Remote Controls

• Customized remote control GUI and software to meet customer application

• Extended transmission distance via integrated repeater grid network

• Multiple command & control frequency capability

• Separate video feedback channel• Supports up to 4 live, simultaneous

wireless video camera feeds• Video playback and recording option

Methode’s Evolution

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Dabir Surfaces• New technology aimed at pressure ulcer prevention

Prevention, care & treatment is an $11 billion/ year spend in U.S. Of that $11 billion, nearly $2 billion is attributed to Hospital Acquired Pressure

Ulcers which are no longer covered by Medicaid & Medicare

• Pressure Ulcers Caused by prolonged pressure, skin shear, excess moisture and heat Dabir technology addresses all the above in an easy to use, semi-disposable


• Licensed and owned IP combined with Methode’s Manufacturing expertise Existing technology portfolio TouchSensor user interface Encrypted wireless communication

Methode’s Evolution

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Dabir Surfaces• Provides

Alternating Micropressure support and tissue relief Adjustable cycle speed and firmness control Reduced skin shear during operation Optional low-air-loss Microclimate control Enhanced infection control as a semi-disposable overlay

• Overlay Features Placed between mattress and cover linen Multi-patient use with standard cleaning 200 hour product life for Surgical 2,160 hour product life for MedSurg Bed Wireless electronic intelligence X-ray translucent

Methode’s Evolution

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Dabir Surfaces

Methode’s Evolution

• Application Potential Long-duration surgical procedures

Recovery & long-term care settings (Nursing Homes, Home Care)

Any patient group which is either immobilized or at-risk for pressure ulcer formation

• Currently concentrating on long-duration surgical procedures Controlled launch at beta hospital

As of September 2015 – 500+ procedures from 4-20 hours duration

No adverse tissue effects or quality concerns to date

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Dabir Surfaces

Methode’s Evolution

• Commercialization FDA Device Class II – 510k exempt registration complete

Direct regional sales network, national medical representatives and partners

• FY15 second-quarter introductory sales

• Continue to develop product and IP

• Clinical Research Dialysis – completed outpatient dialysis comfort study with 20% improvement

Pressure mapping and limited MRI perfusion study performed at Cleveland Clinic with good results

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• Will continue to follow a balanced strategy of investing in our business, maintaining a strong and flexible financial position and returning cash to shareholders Continue to invest in core businesses to grow, defend and improve our competitive


Continue to invest in engineering and launch management to provide customer solutions and near-flawless execution

Maintain strong and flexible balance sheet with ample liquidity to support continued growth organically and through acquisitions

• Investing approximately 3-4% of net sales in R&D

• Leverage global footprint, vertical integration and continuous manufacturing systems improvement

• Targeting 5-year compounded EBITDA growth rate of 9-10%

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