1. University of Illinois at Urbana-Champaign Applied Portfolio Management Methode Electronics Cindy Anggraini Lu Han Rahul Gohil Vanditha R Zhi Cheng (Nicole) Low December 1, 2015

2. ANALYSTS Cindy Anggraini anggrai2@illinois.edu Lu Han luhan4@illinois.edu Rahul Gohil gohil3@illinois.edu Vanditha R. M mysorer2@illinois.edu Zhi Cheng (Nicole) Low zlow4@illinois.edu

3. Holding 100 shares on Apr 13, 2015 Purchase Price = $46.61 Current Price = $36.08 at Nov 30, 2015 Return = -22.59% Source: Yahoo Finance

4. AGENDA Company Overview Macro-economic Overview Financial Analysis Technical Analysis Projection & Valuation Recommendation

5. Company Overview Macro- economic Overview Financial Analysis Technical Analysis Projection & Valuation Recomm endation

6. Company Overview: Introduction Automotive Interface Power Products Other Business Description Manufacturer of component and subsystem devices Year Founded 1946 Market Cap $1.4 billion TTM P/E 13.78 Primary Industry Electronic Manufacturing Services Source: Yahoo Finance

7. Company Overview: Operating Coverage USAEuropeAsia The company is operating globally, with mostly in USA, Europe, and Asia The biggest facilities are in Mexico and Malta

8. Company Overview: Revenue Breakdown (2015) ProductGeographic Source: Investor Presentation

9. Company Overview: Automotive Segment Integrated Center Console Ford General Motors Renault Fiat Aston Martin Transmission Solutions General Motors Ford VW Torque Sensor BMW Hidden & Ergonomic Switches Global Market Share of 18% European Union Market Share of 35% Source: Investor Presentation

10. Company Overview: Interface Segment Consumer Touch Panels High resolution LCD touchscreens Over 30% of commercial/industrial solid state touch interfaces in North America Industrial User Interfaces Radio Remote Control Solutions Data Center Infrastructure Solutions Fiber Optic & copper cable assemblies Uninterruptable Power Supply Main Clients Coca Cola, John Deere, Whirlpool, Kitchen Aid, Maytag, Hitachi Source: Investor Presentation

11. Company Overview: Power Products Segment Braided flexible cables EV bus bar assemblies Nissan Leaf North America & Europe Each vehicle requires 48 battery modules Three Methode assemblies utilized on each battery module Tesla S PowerRail Power distribution system Currently shipping to “Big Data” customer Source: Investor Presentation

12. Company Overview: Future Projects SmartCenter Stack Wireless cell phone connection, Vehicle touchscreens HighPerTouch Enhanced touch performance 10G Copper Transceiver Modules More cost effective than optical counterparts Dabir Surfaces New technology for pressure ulcer prevention 1 2 3 4 Source: Investor Presentation

13. Company Overview: SWOT Strengths Distribution and sales network Tax advantages due to global locations Low debt financing Weakness High exposure to automotive sector, esp. Ford and GM Lengthy sales cycle Price of raw materials Highly competitive market environment Exchange rate Opportunities Engagement in M&A activity Diversifying product portfolio Threats Changes in technology Continued pressure to lower prices SWOT

14. Company Overview: Porter 5 Forces Bargaining Power of Buyers: High Bargaining Power of Suppliers: Moderate Threats of New Entrants: Low Threats of Substitutes: Moderate Rivalry: Moderate Porter 5 Forces Bargaining Power of Buyers – High Continued pressure to lower prices to avoid competition Bargaining Power of Suppliers – Moderate Availability of raw materials from different suppliers Threat of new entrants – Low High initial investments Threat of substitutes – Moderate Customized products for each manufacturer Rivalry among existing competitors – Moderate Competition on Price and Technological advancements

15. Company Overview Macro- economic Overview Financial Analysis Technical Analysis Projection & Valuation Recomm endation

16. Macro-economic Overview Automotive Industry US vehicle sales will rise to record peak in 2017 Tesla S and Nissan leaf among top 5 electric car models Electronic Industry Rapidly-increasing data traffic is driving the demand for data storage Global power electronics market growth rate to fall post 2018 Heavy Equipment Industry Agriculture equipment demand to fall in US, offset by Asia Heavy construction equipment market driven by emerging markets Source: KPMG’s Global Automotive Executive Survey 2015, Clean Technica, DatacenterDynamics, HIS Technology, PR Newswire, Freedonia Group

17. Macro-economic Overview Automotive Outlook Based on Sales Volume Long-term Touch Module Shipment Forecast Source: IHS, KPMG Global Automotive Survey GM & Ford will hold their position by sales volumes in 2020 Touch Panel Module shipments to rise but at lower growth rates

18. Company Overview Macro- economic Overview Financial Analysis Technical Analysis Projection & Valuation Recomm endation

19. Financial Analysis: Agenda Financial Highlights Liquidity and Leverage Ratio Profitability and Activity Ratio Greenblatt and Dupont Ratio

20. Financial Highlights: Revenue Breakdown (2015) AutomotiveInterfacePower Products Source: 10-k 2015

21. Financial Analysis: Liquidity & Leverage Ratio Liquidity Ratio Leverage Ratio Source: 10-k 2015

22. Financial Analysis: Profitability & Activity Ratio Profitability Ratio Activity Ratio Source: 10-k 2015

23. Financial Analysis: Greenblatt & Dupont Ratio Greenblatt Ratio Dupont Analysis 20112012201320142015 Tax Burden134.48%73.68%107.39%126.61%83.69% Interest Burden90.63%100.00%96.68%103.13%107.66% Operating Profit Margin3.74%2.45%7.54%9.52%12.73% Asset Turnover1.26x1.24x1.53x1.49x Leverage1.44x1.54x1.48x1.39x ROE 3.27%14.95%28.21%23.77% Source: 10-k 2015

24. Company Overview Macro- economic Overview Financial Analysis Technical Analysis Projection & Valuation Recomm endation

25. Technical Analysis Methode Electronics Big drop (around 30%) on June 25, 2015 because company’s financial results were not able to meet the investor expectations. Source: Yahoo Finance

26. Company Overview Macro- economic Overview Financial Analysis Technical Analysis Projection & Valuation Recomm endation

27. Projection and Valuation: Agenda Assumptions Revenue Projection Valuation : DCF and Comparable 1 2 3

28. Projection and Valuation: Assumptions Management guidance for 2016 Sales - $830-$865mm Operating Income - $108-$119mm Continue to invest in core business and grow Maintaining strong and flexible balance sheet with ample liquidity Targeting 5 year EBITDA CAGR of 9-10% Auto sales to peak in 2017 and drop after that Source: Investor Presentation

29. Projection: Revenue Revenue ProjectionRevenue Projection per Segment

30. Projection: Revenue per Segment Interface Power Products Automotive

31. Valuation: DCF

32. Valuation: Sensitivity Analysis

33. Valuation: Comparable Methodology Industry: Electronic Manufacturing Services Sector: TechnologySimilar Product MixSimilar End Markets International Exposure CTS Designs and manufactures sensors and actuators, and electronic components worldwide. Amphenol Designs and manufactures electrical, electronic, and fiber optic connectors worldwide. AVX Designs and manufactures electronic passive components and interconnect solutions worldwide.

34. Valuation: Comparable Valuation Result LTM EV/RevenueLTM EV/EBITDALTM P/ELTM P/BV CTS Corp. (CTS) 1.4x8.4x22.8x2.7x Amphenol Corp. (APH) 3.3x14.1x22.9x80.5x AVX Corp. (AVX) 1.1x5.9x11.0x1.2x Median 1.4x8.4x22.8x2.7x Implied Price 35.8 37.1 60.6 31.6 Equally weighted average price per share: $41.3

35. Valuation: Background of Comparison MEI is a unique company Most of its revenue comes from automotive Market treats MEI similar to its customers 1 2 3

36. Valuation: Comparable Valuation Result (Cont.) Equally weighted average price per share: $32.2 LTM EV/RevenueLTM EV/EBITDALTM P/ELTM P/BV Whirlpool Corp. (WHR)0.8x8.7x19.0x2.7x General Motors Company (GM)0.6x6.0x13.3x1.7x Ford Motor Co. (F)1.1x10.8x12.0x2.1x Deere & Company (DE)2.1x13.8x 3.8x Median1.0x9.8x13.6x2.4x Implied Price 25.7 42.336.024.6

37. Company Overview Macro- economic Overview Financial Analysis Technical Analysis Projection & Valuation Recomm endation

38. SELL Comparable Valuation DCF Valuation Revenue Projection Industry Factor Sell 100 shares @market price

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