baird 2018 global industrial conference - amazon s3 · large automotive customers; (2) dependence...

22
Baird’s 2019 Global Industrial Conference November 5, 2019 Don Duda, CEO Ron Tsoumas, CFO Mark Shermetaro, VP Corporate Development

Upload: others

Post on 08-Jul-2020

4 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Baird’s 2019 Global Industrial Conference November 5, 2019

Don Duda, CEORon Tsoumas, CFOMark Shermetaro, VP Corporate Development

Page 2: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

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

Page 3: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Methode is …

788 patents

450+ global engineers

6,200+ employees

$1+ Billion Sales

Automotive69%

Industrial26%

Medical Device

Interface5%

10-year

revenue

growth CAGR

of 8.9%

10-year

EBITDA

growth CAGR

of 21.4%

Leading developer and manufacturer of custom-engineered solutions and

application-specific products utilizing the latest technologies for the Automotive, Industrial

and Medical markets.

North America

68%

Europe23%

Asia9%

3

Page 4: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Automotive Industrial Medical Interface

TECHNOLOGY ENGINEERING MANUFACTURING

Methode’s reporting segments are…

4

Page 5: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Leading, Patented Technology Solutions

Assembly Decorating Electronics Metal Plastic Testing

AUTOMOTIVE INTERIOR

Headlamp Switches

Steering Wheel Switches

Window Switches

Touchpads

Rear Seat Controls

Overhead Consoles

Touchscreens

Center-stacks

Center Console Switches

Smart Knobs

Rotary Position Sensor

AUTOMOTIVE EXTERIOR

Gesture/Touch Tailgate Emblem

Integrated Tailgate Module

Advanced Illumination

In-glass Messaging

Keyless Entry

Handle-free Door Solution

Side Mirror Projection

Anti-roll Stability Sensor

Smart Towing Sensor

Transmission Position Sensor

LIGHTING

Sill Plates

Flood Lighting

Ambient Lighting

Material Illumination

Reading / Dome Lamps

Seat Illumination

Full Color Spectrum

Holographic Lighting

ELECTRIC VEHICLE

Intelligent Battery Connection

Battery Bus Bar Connections

Battery Disconnect Unit

PowerBud Connectors

Insert Molded Bus-bar/Carriers

Powder Coated Bus Bar

Flexible Bus Bar

Laminated Bus Bar

J1772 Charging Connector

COMPLEX INSERT MOLDED

Transmission Controller

(Lead Frame)

Engine Control Units

Ignition Switch

Anti-Lock Braking Assemblies

Pedal Assemblies

Door Latch Actuator

Horn Contact Unit

Transmission Solenoid Connector

Page 6: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Growing Content Per Vehicle

Electric SUV

• Numerous interior lamps

$228

6

Ford Explorer

• Integrated Center Panel• Ignition Switch• Brake Switch• IP Switches• Overhead Console• Ambient Lighting

$75

Page 7: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Growing Content Per Vehicle

7

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.

Page 8: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Methode Outperformed the MarketAutomotive Industry Volumes Versus Methode’s Automotive Sales

-10.1%

-2.2%

-6.6%

-18.7%

8.0%

17.1%

-0.6%

-17.5%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

CY Q2 19 MEI Q1 FY20*

Global NA Europe China

*Excludes impact of currency+ Source, Ward’s, JD Power, ACEA

• Grakon auto sales in NA

• Strong mix of products for SUVs and pickup trucks in NA

• 6 launches - 3 in NA, 3 in Europe

• Limited exposure to domestic Chinese automotive OEMs

• Methode Asia affected by passenger car slowdown and price downs

• New product launches during FY 20 should further help offset headwinds

+

8

Page 9: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Headlamp / Fog / DRL Lighting

Rear Lighting

RGB Ambient Lighting

Interior Task Lighting

Storage Lighting

Safety Lighting

Signal / Marker Lighting

Work / Task Lighting

Lighting Control Modules

Wireless Control and Feedback

Wireless Video Feedback

Rf Proximity Detection

Integrated Controller and Remote Control For Locomotives

Rf E-stop

Weight Sensor (Magneto-elastic)

Electromechanical and Remote Control Retrofit Kits

Batteries and Chargers

Accessories (Straps, Belts, Vests, Etc.)

Bus Bar Solutions

Power Connectors

Power Assemblies

Power Cable Solutions

Thermal Solutions

PowerBud Connectors

Open Compute Connector

PowerRail

FLUID LEVEL SENSING

Sump Pump Switch

Bilge Pump Switch

Sewage Level Switch

RV Tank Level and Monitor

Marine High Water Alarm

Battery Electrolyte Level Sensor

Leading, Patented Technology Solutions

Assembly Decorating Electronics Metal Plastic Testing

Page 10: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Strong Product Development Heritage

ICS WithTouch

Controls

ICS With Touchscreen

Multimedia Controller

Overhead Console

Integrated Tailgate Module

Pressure Injury Prevention Overlay

10

Page 11: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

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

• Suitable for use across the continuum of care

• Improves patient comfort and is well accepted by clinical staff

• New Dabir Gen2 (compact) system delivers greater flexibility outside surgical environment

Controller

Interconnect

Dabir Surgical System Dabir Gen2 Controller

11

Page 12: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Global Manufacturing Footprint

LONTZEN,BELGIUM

SHANGHAI, CHINA

195,000 Sq Ft566 Employees

FRESNILLO, MEXICO

120,000 Sq Ft930 Workers

NASR, EGYPT121,000 Sq FT

530 Employees

MRIEHEL, MALTA

299,000 Sq Ft1,330 Employees

MONTERREY, MEXICO287,000 Sq Ft

1,180 Employeesand

128,000 Sq Ft830 Employees

DONGGUAN, CHINA

197,000 Sq Ft950 Employees

CHICAGO, ILONTARIO,CANADA

35,000 Sq Ft110 Employees

12

In CHICAGO:

Harwood Heights – Dabir40,000 Sq Ft

55 Employees

Rol l ing Meadows – PSG52,000 Sq Ft

140 Employees

OKLAHOMA CITY,OK

155,000 Sq Ft110 Employees

Page 13: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Global Sales and Engineering Centers

*CHICAGO, IL*

SEATTLE ,WASHINGTON

SAN JOSE,CALIFORNIA

DETROIT, MICHIGAN

NELSON, CANADA

OKLAHOMA CITY, OK

BURNLE Y, U.K.

MRIEHEL,MALTA

GAU-ALGESHEIM &MUNICH, GERMANY

BEIRUT, LEBANON

SHANGHAI, CHINA

BANGALORE,INDIA

TOKYO, JAPAN

SHENZEN, CHINA

13

* In CHICAGO, IL :

HARWOOD HEIGHTS

ROLLING MEADOWS

Page 15: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

AUTOMOTIVE INDUSTRIAL MEDICAL INTERFACE> LED lighting

> EV / HEV – Power management

> Infotainment

> ADAS / Autonomous (need of sensors)

> LED lighting

> Instrumentation

> Power distribution / Renewables

> Commercial Vehicle driver shortage

> ADAS / Autonomous (need of sensors)

> Driver and worker safety

> IoT

> Never events (reduce pressure injuries, etc.)

> Patient quality – hospital rating systems

> Wellness

> Affordable Care Act – pay for outcomes vs. treatment

> Tele-medicine / homecare

> Flexible/ configurable user interfaces

> Kiosks

> Digital Bandwidth demand (IoT, 5G)

> Product design – brand differentiation

Growth Drivers By Segment

15

Page 16: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

FY 2018 FY 2019 FY 2020 (est.) FY 2021 (est.) FY 2022 (est.)

*Booked business as of 7/1916

Sensing Technology Organic Product Growth

Page 17: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Capital Deployment Focused on Value Creation

Fund the Business

Acquisitions $553M 58%

Cap Ex $143M 15%

Return to Shareholders

Share Repurchase $ 72M 7%

Dividends $ 58M 6%

Product Development $135M 14%

$961 Million Allocated Fiscal Years 2016-2019

17

Page 18: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Strong Cash Flow and Balance Sheet

* Millions± Adjusted, Net Income + Depreciation + Amortization - CapEx

** Estimate

$88$123

$84 $85

$130

$0

$50

$100

$150

FY2016 FY2017 FY2018 FY 2019 FY 2020**

Free Cash Flow*±

18

Page 19: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Continued Value Creation

Grow Organically and Inorganically

Leverage existing technologies to grow organically, increasing $ content/vehicle faster than volumes are dropping

Invest in innovation which will integrate our technologies into new products

Seek acquisitions in Industrial and opportunistically in Medical Device and Automotive

Strong Financial Management

Optimize capital allocation

Expand margins and ROIC - SGA efficiency, footprint rationalization and other initiatives

Seek to maintain effective tax rate via leverage of global manufacturing footprint

Focus on debt repayment

19

Page 20: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

FY2020 Guidance

$3.25-$3.55EPS

$150.3-164.3MPre-Tax Income

18-21%Income Tax Rate

$1.13-1.17BRevenue

$51-$54MDepreciation and Amortization

$122-$136MFree Cash Flow

$48-$54MCapEx

20

Page 21: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Investment Appeals

Patented Technology Solutions

Strong Product Development Heritage

Organic Product Growth

Substantial Free Cash Flow Generation

Strong Balance Sheet

Capital Deployment Focused on Value Creation

Broad Customer Base

Global Lean-Manufacturing and Engineering Footprint

Highly Vertically Integrated

21

Page 22: Baird 2018 Global Industrial Conference - Amazon S3 · large automotive customers; (2) dependence on the automotive, appliance, commercial vehicle, computer and ... Anti-Lock Braking

Thank you