43
Innovation Drives Long-Term Growth September 2013

Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

  • Upload
    others

  • View
    3

  • Download
    0

Embed Size (px)

Citation preview

Page 1: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

Innovation Drives Long-Term Growth

September 2013

Page 2: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

2

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 one large automotive customer; (2) dependence on the automotive, appliance, computer and communications industries; (3) customary risks related to conducting global operations; (4) timing, quality and cost of new program launches; (5) ability to avoid design or manufacturing defects; (6) ability to compete effectively; (7) dependence on the availability and price of raw materials; (8) dependence on our supply chain; (9) downturns in the automotive industry or the bankruptcy of certain automotive customers; (10) ability to keep pace with rapid technological changes; (11) ability to protect our intellectual property; (12) ability to withstand price pressure; (13) location of a significant amount of cash outside of the U.S.; (14) the recognition of goodwill impairment and long-lived asset charges; (15) currency fluctuations; (16) ability to successfully benefit from acquisitions and divestitures; (17) ability to withstand business interruptions; (18) income tax rate fluctuations; (19) a breach of our information technology systems; and (20) the cost and implementation of SEC disclosure and reporting requirements regarding conflict minerals.

Page 3: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

3

Page 4: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

4

Hitting Its Stride

> Transformed to supplier of customized and highly innovative solutions to automotive, white goods and industrial markets

> FY13 sales grew nearly 12% over FY12 > FY13 non-GAAP EPS of $0.52* compared to FY 12 EPS of $0.22 > Rapid revenue growth—15% sales CAGR projection FY12-FY16 > Sustainable innovation, robust technology—290 patents > Capitalizing on fundamental changes in large, growth markets > Strong balance sheet—~$73.4 million in net cash and credit

availability** > Current dividend yield of 1.1%***

**as of July 27, 2013 ***as of September 13, 2013

*Adjusted for the $20.0 million Delphi settlement,$.3 million Eetrex impairment,$2.1 million Tandem Cash Award expense and $7.6 million increase in the Malta deferred tax asset.

Page 5: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

5

Three World-Class Solution Groups Au

tom

otiv

e • Integrated center console modules

• Electronic and electromechanical devices

• Customized sensors In

terc

onne

ct • Field-effect technology

and user-interface panels

• Safety radio remote controls

• Copper and fiber optic interconnect solutions

• Conductive polymer and thick film inks

Pow

er P

rodu

cts • High current-carrying

bus devices

• Power electronics for chargers, inverters

• Battery management systems for stationary storage systems

• Flexible cabling systems

• Thermal management and high current interconnects

Page 6: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

6

Global Operations

FY13 Sales By Manufacturing Location

FY13 Sales By Segment

59.7% 27.0%

10.1%

3.2% Automotive

Interconnect

Power Solutions

Other

50.0%

31.0%

19.0% North America

Europe

Asia

Page 7: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

7

Leader in “Connected” and “Green” Solutions for the Automotive Industry

Page 8: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

8

Connected Solution: Center Consoles

> “Center Stack is new high-stakes battleground” Auto News September 5, 2011

> Today’s center stacks incorporate • Touchscreens

• Touch panels

• Ambient lighting

• Integrated software which allows multiple components to communicate within, as well as outside of the vehicle

> Methode one of a select few global suppliers with both technology and manufacturing expertise, as well as ability to integrate everything into stylistic design

Page 9: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

9

Connected Solution: Center Consoles

North American Automotive Major Integrated Center Stack Competitors

Supplier Customer Global MFG Paint and Laser Touch Experience

Methode GM, Ford All 3 regions Yes Yes Alpine GM, Chrysler All 3 regions Yes Minimum

TRW Ford, Chrysler All 3 regions No Minimum (samples only)

Delphi GM All 3 regions Yes Minimum (samples only)

Preh Ford All 3 regions Yes Yes

Panasonic GM, Ford All 3 regions No Yes

Kostal Ford, European OEMs

North America, Europe

No No

Page 10: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

10

Connected Solution: Center Consoles

> Two awards with Ford for Model Years 2011 and 2013

• Utilize TouchSensor’s Field-Effect and Integrated Back Lighting technologies

• $40 million annually at full production in FY13

• 2011 MKX, Edge, & Explorer • 2013 Taurus, Flex, MKS, & MKT • Standard on Lincoln models, estimated 80%

take rate on Ford models • Five-year program life • PACE 2012 Award Winner for Field-Effect™

solid-state switches

Touch-sensitive Audio and Climate controls utilize Field-Effect technology

and Integrated Back Lighting

Integrated Center Consoles For MyFord and MyLincoln Touch

Page 11: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

11

Connected Solution: Center Consoles

> GM K2xx truck, K2xx SUV and 31xx lightweight truck platforms

• Five-year program life

• No take rate, standard on every model

• Methode will provide the entire center console including the display, touchscreen and an articulation design on certain platforms

“Next Generation” Integrated Center Consoles For GM Platform Production

K2xx Truck Q1 FY14 (May 2013)

K2xx SUV Q3 FY14 (January 2014)*

31xx Light Truck Q2 FY15 (August 2014)*

*Expected

Page 12: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

12

Connected Solution: Center Consoles

“Next Generation” Integrated Center Consoles For GM

Platform 2014 Chevrolet Silverado Crew Cab

2014 GMC Sierra Crew Cab

2014 Chevrolet Silverado Extended Cab

2014 GMC Sierra Extended Cab

2014 Chevrolet Silverado Regular Cab

2014 GMC Sierra Regular Cab

2014 Chevrolet Tahoe

2014 GMC Yukon

2014 Chevrolet Suburban

2014 GMC Yukon XL

Page 13: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

13

Major Automotive Revenues – FY14

*Based on LMC Automotive data

Ranked In Size Of Sales NORTH AMERICA

General Motors Group Ford Group

Mitsubishi Motors Fiat-Chrysler Group Volkswagen Group

EUROPE Volkswagen Group

Ford Group Tata Group

Fiat-Chrysler Group Renault-Nissan Group

Aston Martin McLaren

PSA Group Mazda Motors

General Motors Group BMW Group Geely Group

Mitsubishi Motors Suzuki Group

ASIA General Motors Group

Ford Group Mitsubishi Motors Volkswagen Group

Hyundai Mazda Motors

Great Wall Motor Dongfeng Motor

SAIC Group Renault-Nissan Group

Yulong PSA Group

Fiat-Chrysler Group Tata Group

Suzuki Group BMW Group

SOUTH AMERICA Ford Group

General Motors Group Volkswagen Group

PSA Group Fiat-Chrysler Group

AFRICA General Motors Group

Volkswagen Group Ford Group

Page 14: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

14

Major Automotive Revenues – FY14

*Based on LMC Automotive data

Percent of Automotive Sales Worldwide*

General Motors Group 51.5%

Ford Group 25.7%

Volkswagen Group 5.9%

Mitsubishi Motors 3.3%

Fiat-Chrysler Group 3.1% All Others

10.5%

General Motors Group 51.5% Ford Group 25.7%

Volkswagen Group 5.9% Mitsubishi Motors 3.3%

Fiat-Chrysler Group 3.1% Tata Group 2.8%

Renault-Nissan Group 2.5% Aston Martin 1.3%

Mazda Motors 1.0% PSA Group 0.8% McLaren 0.7% Hyundai 0.5%

BMW Group 0.3% Geely Group 0.2%

Great Wall Motor 0.2% Dongfeng Motor 0.1%

SAIC Group 0.1% Yulong 0.1%

Page 15: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

15

Connected Solution: Transmission Lead Frame

> Integrated power and signal distribution backbone for transmission controller

> Highly complex insert molded assembly reduces electrical connections required with traditional design

> Improves system reliability, reduces costs

> Three awards (2 for GM, 1 for Ford) for $40m in average annual revenue at full production in FY14

GM T76 Lead Frame

Ford 6F35 Lead Frame

Page 16: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

16

Connected Opportunities: Center Consoles

> One of fastest trends in automotive-interior electronics is to replace traditional mechanical switches with solid-state switches

> Lower costs • Lower tooling bills than traditional mechanical systems • Ford Edge - one complete panel versus bezel with 21 individual buttons • Electronic design can be carried over to new platforms

> Saves space where space is at a premium - Thinner than traditional mechanical solutions

> Opportunity for Methode: Once on a platform, have opportunity to provide other innovative and proprietary content

Page 17: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

17

Connected Opportunities: Touchscreens

> Capacitive touchscreens with functionality similar to iPhone or iPad

• MEI’s capacitive screens considered superior solution

• Have been rigorously tested to automotive standards

> According to IMS Research, in 2011, 5.8 million automotive touchscreens were sold globally and sales are expected to rise six-fold by 2019 to 35.7 million

> iSupply recently estimated that 9 out of 10 vehicles sold in U.S. now offer screens within the center console and those that offer touchscreens almost entirely utilize resistive technology

Page 18: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

18

Green Solutions: EV Bus Bars

Bus Bar Assemblies for Nissan Leaf Electric Vehicle > Nissan North America and

Europe Lithium-ion battery cells > Each vehicle requires 48 battery

modules > Three Methode assemblies

utilized on each battery module > Methode developed and

implemented an innovative, automated production system

Nissan Battery Pack with 48 battery modules

Page 19: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

19

Green Solutions: Transmission Sensor

Clutch Plate Position Sensor > Magneto-elastic technology enables accurate and repeatable

measurement > Deployed in new generation of fuel efficient, dual clutch

transmissions > Resolution nearly ten times current, commercially viable

technology > Withstands harsh environment of transmission > Operates at temperatures in excess of 360°F > $6m in revenue in FY15, ramping to $19m in FY16

Page 20: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

20

Green Opportunities: Transmission Torque Sensor

Characteristic Today Methode’s

Magneto-elastic Technology

Torque calculated by Estimation Measurement

Completely real time No Yes

Accuracy invariant to temperature and altitude

No Yes

Accuracy of initial calibration maintained over time

Sufficient Excellent

Calibration accuracy in cars Very good Excellent

Calibration accuracy in trucks and SUVs

Sufficient Excellent

Smoothness of shift Sufficient Excellent

Fuel efficiency Sufficient Very good

Magneto-elastic Torque-Sensing Technology

Page 21: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

21

TouchSensor, Hetronic And Data Solutions Enabling Differentiation

Page 22: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

22

User Interface Solutions: White Goods

> TouchSensor’s user interfaces are found on over 60% of the solid-state touch interfaces in North America

• Integrate Touch, LED’s & Displays and decorative fascia into one UI sub-assembly

• Offering includes discrete key designs as well as high-resolution LCD touchscreens

Jenn-Air Wall Oven KitchenAid Refrigerator Electrolux Dishwasher

Page 23: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

23

User Interface Solutions: White Goods

> First program win in laundry space with integrated Touch

• Launched in Q2 FY 2013

• Includes Whirlpool “Duet” and Maytag “Maxima” front-load product lines

• $30-40 million at full production in FY14

• Consumer Reports recently rated two versions of this platform as best in class

Whirlpool Washer/Dryer

Page 24: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

24

User Interface Solutions: Industrial

Hetronic Safety Radio Remote Control Solutions

> Used on five continents to control multi-million dollar equipment safely and precisely

• Locomotives, Rail Car Movers, Trains

• Construction Equipment - Tower Cranes, Loader Cranes, Concrete Pumps, Excavators, Front loaders

• Welding & Utility Equipment

• Mining, Explosion Proof and Material Handling equipment

Hostile Environments

Loader Cranes

Page 25: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

25

User Interface Solutions: Industrial

Hetronic Safety Radio Remote Control Solutions

> Pioneering features • Fail Safe and Redundant Emergency Stop

Circuitry

• Interference Protection

• Remotely Programmable

• Operator friendly and impact resistant

> Designed to withstand the most challenging work environments

Container Handlers

Drilling Applications

Page 26: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

26

TouchSensor & Hetronic Opportunities

TouchSensor > “Touch Experts” – combining

touch technology, modern illumination techniques, aesthetics and unrivaled launch management capabilities

> Opportunities in • Medical equipment • Vending • Industrial and consumer level sensing

(LevelGuard brand)

Hetronic > Transition to one-stop shop

- from component supplier to control solution provider

> Opportunities in • Gas & Oil – explosion proof

components • Railway/Locomotive – radio

remote control + pneumatics • Construction - Programmable

logic controllers Ruggedized touchscreens

Page 27: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

27

Innovative Power Distribution and Thermal Management Solutions

Page 28: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

28

Power Solutions: High Current Demand

> Design and manufacture innovative products for military, aerospace, industrial and automotive markets

> For • Wind turbines • Solar panels • Electric and Hybrid vehicles • Next generation light rail • New high efficiency servers • Fighter jet radar systems • Boeing Dreamliner

> Solutions • Patented, high current inter-

connects • Thermal management capabilities • Flexible power distribution devices • High voltage power electronics

Page 29: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

29

Power Solutions: High Current Demand

> Collaborate with customers to develop robust systems that meet stringent electrical and thermal performance, weight and cost needs

> Fortune 100 customer base

> Increase power distribution density

> Improve energy efficiency

> Reduce heat losses

> Variety of applications and products across many end markets

Page 30: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

30

Power Opportunities: Eetrex

> 90% ownership in Eetrex - developer of power electronics such as chargers, inverters and battery management systems

> Eetrex specializes in application of proprietary embedded system electronics for super efficient power management

> Focused on development of stationary storage to replace lead-acid batteries with lithium ion solutions

Page 31: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

31

Rebuilding Revenue and Improving Profitability and Margins

Page 32: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

32

Future Revenue Growth*

> Sales projections as of July 2013

> Projections are approximate and may vary 15%-20% based on economic conditions, customer demands, and other factors

> Approximately 10% of base business goes end of life each year

> Utilized LMC Automotive volume data and other sources

> Projection for FY 14 represents midpoint of guidance range

*All numbers millions of dollars

$373 $428 $465 $520 $685 $720 $720

$105

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

FY10 FY11 FY12 FY13 FY14 FY15 FY16

Methode’s Historical High Sales of $555 in FY08

Approximate 15% CAGR

Pending

$825

Booked and Base Actual

Page 33: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

33

Major Anticipated New Revenues

FY14

> GM center console

> TouchSensor laundry program (Fully ramped)

> Nissan-Renault EV busbars

> Volkswagen, Jaguar, McLaren ergonomic switches

FY15

> Additional GM center console

> GM Linear Sensor

Page 34: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

34

Recent Financial History

> FY13 vs. FY12 • Sales improved 11.8%

New product introductions & higher market penetration in North America

Offset by continued softness in Europe

• Significantly lower effective tax rate

> FY13 - Development and launch costs • Lowered net income $7.1m or $0. 19 per share

• Lowered consolidated gross margins 2.3 percentage points

• GM development costs absorbed as product produced and revenue realized beginning in Q1 FY14

Page 35: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

35

Recent Financial History

> Q1 FY 14 • Sales improved nearly 41% over Q1 FY13

Strong sales for General Motors and Ford center console programs

New product launches in European Automotive and North American Power Products

Strong base appliance sales

• Net income grew 250% to $13.6 million

Higher sales

Strong expense leverage

Increased manufacturing efficiencies due to vertical integration of paint and laser etch process

Favorable raw material pricing and favorable product mix in Power Products

Page 36: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

36

Recent Financial History

> Q1 FY 14

• Consolidated gross margins improved to 20.3% compared to 18%

Increased sales

Vertical integration and favorable raw material pricing and sales mix in the Power Products segment

Lower than anticipated scrap on the Ford center console and K2XX programs

• Consolidated SG&A as a percentage of revenues decreased to 11.3% from 14.5% in Q1 FY13

• Increased FY14 guidance to sales of $670 million to $700 million and EPS of $1.40 to $1.60

Page 37: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

37

FY14 Guidance

> Q2 should be similar to Q1 in sales and earnings > Q3 affected by typical holiday slowdowns > Q4 includes planned production of General Motors SUV center

consoles > Low end of guidance reflects

• Concern regarding stabilization of European economy • Potential softening in Interconnect and Power Products segment sales • Potential production delays of new products

> High end of range anticipates • Stabilization in Europe • Higher domestic Automotive revenues • Potential upside from Power Products

Reported FY13 Guidance FY14

Total Revenue $520 $670 - $700

EPS $0.52 $1.40 - $1.60

Page 38: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

38

Rebuilding Margins

FY11 FY12 FY13 FY14 Target FY15 Target

Automotive 17.6% 14.1% 14.0% High teens% Low to mid 20%

Interconnect 30.3% 28.3% 26.2% Mid to high 20% High 20 to low 30%

Power 21.0% 16.5%* 17.3%* Low 20% Mid 20%

Gross Margins

* Includes Eetrex development costs. Without these costs, gross margins would have been 21.8% in FY 12 and 22.0% in FY13.

> Automotive improvement driven by

• Vertical integration of paint and laser etch process

• Revenue from GM K2XX • Methode capacitive touchscreen in FY15 • Europe and Asia already meeting margin

goals

> Interconnect improvement driven by

• Improved mix from greater revenue contribution from Hetronic

> Power impacted by • Eetrex development costs • Lower military program • Cost control measures

Page 39: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

39

Rebuilding Margins

FY11 FY12 FY 13

Auto 5.9% 3.7% 5.5%

Interconnect 14.4% 14.1% 13.1%

Power 7.1% 3.2% 1.6%

Consolidated 3.7% 2.5% 4.2%

Pre-Tax Operating Margins

> FY14 goal 9-10% consolidated

Page 40: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

40

Why Invest in Methode Today?

Page 41: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

41

Investing In Our Future Growth

> Continue strong investment in engineering group to bid new business opportunities and launch programs

• Most new business wins do not realize revenue for 18-24 months

> Invested approximately 4.6% of net sales in R&D in FY 2013

• Strong business case

• Most development programs will not realize revenues for 3-5 years

Page 42: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

42

Hitting Our Stride

> Execution, seasoned launch and design teams

> World-class manufacturing capabilities due to Automotive pedigree

> Vertical integration and continuous manufacturing systems improvement

> Technology differentiates customers’ products to drive higher margins

> Increasingly working at “design” phase versus “bid” phase

> Strong backlog of booked programs

Page 43: Innovation Drives Long-Term Growthedg1.precisionir.com/irwebsites/methode/MEI_Road...> Rapid revenue growth—15% sales CAGR projection FY12- FY16 > Sustainable innovation, robust

43

Methode’s Business Strategy

Shareholder Value

Innovation

New Products Offering

Expanded Content

Revenue Growth

Improved Margins and Profitability