Nacco Industries, Inc. · NYSE:NC
Nacco Industries — Investor Presentation (September 2012)
52 slides from Nacco Industries's investor presentation, Sep 24, 2012
Slide 1: Investor Presentation September 24, 2012
Investor Presentation September 24, 2012
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward Looking Statements The statements contained in this presentation that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking
Slide 3: Agenda
Agenda 1. NACCO Industries Overview and Strategic Objectives 2. NACCO Materials Handling Group Spin-off Transaction Summary and Rationale 3. NACCO Industries Business Overviews – North American Coal – Hamilton Beach Brands – Kitchen Collection 4. NACCO Industries Financial Update 2
Slide 4: NACCO Industries Overview and Strategic Objectives
NACCO Industries Overview and Strategic Objectives
Slide 5: Post Spin-off NACCO Industries at a Glance
Post Spin-off NACCO Industries at a Glance n NACCO Industries, Inc. (NYSE: NC) n Operating holding company with subsidiaries in the mining, small appliances and specialty retail n Headquartered industries in Cleveland, Ohio n LTM 6/30/12 revenue - $813.6 million (1) n LTM 6/30/12 cash flow from oper
Slide 6: Hyster-Yale Spin-Off Transaction Summary
Hyster-Yale Spin-Off Transaction Summary NACCO Industries, Inc. (“NACCO”) is undertaking a stock spin-off of Hyster-Yale Materials Handling, Inc. (“Hyster-Yale”) n Distributing Company……………….......................NACCO Industries, Inc. (NYSE: NC) n Distributed Company……………....…Hyster-Yale Materials
Slide 7: Spin-Off Rationale
Spin-Off Rationale n The spin-off satisfies important business objectives for Hyster-Yale: – Creates greater flexibility to pursue strategic growth opportunities, such as acquisitions and joint ventures in the materials handling industry – Reinforces management’s focus on serving each of Hyster-Yale
Slide 8: What the Spin-off Means for NACCO
What the Spin-off Means for NACCO n After the spin-off, NACCO will continue to own and operate its other principal businesses: North American Coal, Hamilton Beach Brands and Kitchen Collection n NACCO expects to: – Remain a strong, multi-industry company – Operate leading businesses in the mining, s
Slide 9: Post Spin-off NACCO Industries Overview
Post Spin-off NACCO Industries Overview § Headquartered in Dallas, Texas § Headquartered in Richmond, Virginia § Headquartered in Chillicothe, Ohio § LTM 6/30/12 revenue - $88.0 million § LTM 6/30/12 revenue - $503.7 million § LTM 6/30/12 revenue - $227.9 million § LTM 6/30/12 cash flow from operati
Slide 10: Post Spin-off NACCO Industries Overview (continued)
Post Spin-off NACCO Industries Overview (continued) n NACCO expects to continue to enjoy many benefits from its three principal businesses: – Strong collective earnings and cash flow generation capability – Lower earnings volatility and enhanced cash flow sustainability – Significant management expe
Slide 11: Experienced Management Team
Experienced Management Team Alfred M. Rankin Jr. § Chairman, President and CEO of Chairman, President NACCO Industries since 1994 and § Former Vice Chairman, Chief Chief Executive Operating Officer and Director of Officer of Eaton Corporation NACCO J.C. Butler, Jr. § SVP Project John Neumann § VP, G
Slide 12: North American Coal Overview
North American Coal Overview
Slide 13: North American Coal ("NACoal") Overview
North American Coal (“NACoal”) Overview n Mines and markets steam and metallurgical coal for use in power generation and steel production and provides selected value added mining services for other natural n resource surface Open-pit companies mines: North Dakota, Texas, Mississippi, Louisiana and A
Slide 14: NACoal Operations
NACoal Operations The Coteau The Falkirk Properties Mining Company NACoal Company (Freedom Mine) Royalty (Falkirk Mine) Company (1) Reed Corporate Minerals Office Mississippi Lignite Camino Real Mining Fuels, Company The Sabine Demery (Red Hills LLC Mining Company Resources Liberty Mine) (Eagle Pass
Slide 15: Project Mines (Unconsolidated)
Project Mines (Unconsolidated) Project mines produce strong cash flow with minimal capital requirements n Long-term contracts (expiring 2017(1) - 2045) to provide all fuel requirements for adjacent power n plants or customer Customers facilities pay all costs plus an agreed management fee or profit
Slide 16: Consolidated (Non-Project) Mines
Consolidated (Non-Project) Mines Consolidated (non-project) mines provide an opportunity for higher return when NACoal has capital invested n The Red Hills Mine in Mississippi has a long-term fixed price contract (through 2032) to provide fuel to a 440 – Delivered 2.9megawatt million tonspower in 20
Slide 17: Value-Added Mining Services
Value-Added Mining Services NACoal provides selected value-added mining services for other natural resource companies n Fee-based dragline mining services for limerock quarries in southern Florida – Customers pay all operating costs plus an agreed management fee per cubic yard of limestone produced
Slide 18: NACoal Key Strategy Overview
NACoal Key Strategy Overview Our five strategic initiatives for growth n Continue developing new coal mines – Four new mines under development with ~8.5 million tons in targeted annual production n Develop a metallurgical coal platform – Recent Reed Minerals acquisition first step in developing this
Slide 19: Reed Minerals Acquisition Profile
Reed Minerals Acquisition Profile NACoal announced the acquisition of Reed Companies on August 31, 2012 n Acquisition of Reed Minerals businesses in August 2012 expands NACoal’s surface n Produces steam coal and mid-to-high Jasper, AL mining volatile business into bituminous metallurgical coal coal
Slide 20: NACoal Operational Highlights
NACoal Operational Highlights Tons of Coal Delivered (1) (2) (millions of tons) (millions of cubic yards) _____________________ (1) During 2009, NACoal completed the sale of certain assets of the Red River Mining Company ("Red River"). The results of Red River were reflected as discontinued operatio
Slide 21: NACoal Financial Highlights
NACoal Financial Highlights Operating Cash Flow Before Financing ($ in Income ($ in (1) millions) millions) Net ($ in Income millions) _____________________ (1) Cash flow before financing activities and return on total capital employed are non-GAAP measures and should not be considered in isolation
Slide 22: Hamilton Beach Brands Overview
Hamilton Beach Brands Overview
Slide 23: Hamilton Beach Brands ("HBB") Overview
Hamilton Beach Brands (“HBB”) Overview n Leading designer, marketer and distributor of: – Small electric household appliances – Commercial products for restaurants, bars and hotels n HBB has a leading retail market share position in – North In U.S. America & Canada, ranked in top 3 share position in
Slide 24: Broad Product Offering
Broad Product Offering Comprehensive offering of high-quality consumer housewares Coffeemakers Kettles Toasters Irons Slow Cookers Hand Mixers Can Openers Blenders Toaster Ovens 23
Slide 25: HBB Business Highlights
HBB Business Highlights n Strong heritage brands with leading market shares n Focused emphasis on the quality of our products n Strong relationships with leading retailers and customers across diverse channels n Successful track record of product line expansion and new product innovation…we call n t
Slide 26: HBB Key Strategy Overview
HBB Key Strategy Overview n Lead with innovation in our products – Invest in deep understanding of consumer and customer needs – Leverage engineering expertise worldwide to develop innovative solutions that improve everyday living n Pursue sales and marketing excellence – Leverage professional and e
Slide 27: HBB International Opportunity
HBB International Opportunity n Goal is to shift international sales mix to Planned Sales Mix 35% Evolution to 40% Illustrative Example – $100 million international sales → 35% mix – $150 million international sales → 40% mix n Actively targeting fast growing Brazil, China and India growing – Fastes
Slide 28: Recent Product Launches Support Market Share Gains
Recent Product Launches Support Market Share Gains Pending Launch in Late 2012
Slide 29: HBB Financial Highlights
HBB Financial Highlights Revenue Operating Income ($ in ($ in (Loss) millions) millions) (1) Net Income ($ in (Loss) millions) _____________________ (1) 2008 includes goodwill impairment charges of $80.7 million, without which operating income would have been $19.9 million. 28
Slide 30: HBB Financial Highlights (continued)
HBB Financial Highlights (continued) Net Working Capital Cash Flow Before Financing (1) (1) ($ in ($ in millions) Net Working % millions) Capital Revenue Return On Total Capital ($ in Employed (1) millions) _____________________ (1) Net working capital, cash flow before financing and return on total
Slide 31: Kitchen Collection Overview
Kitchen Collection Overview
Slide 32: Kitchen Collection ("KC") Overview
Kitchen Collection (“KC”) Overview n National specialty retailer of kitchenware and gourmet foods – Operates under the Kitchen Collection® and Le Gourmet Chef® store names – Located in outlet and traditional malls throughout the U.S. n Outlet mall niche focus differentiates Kitchen Collection – Chal
Slide 33: KC Business Highlights
KC Business Highlights n Two complementary retail store formats – Kitchen Collection® → comprehensive selection of all your kitchen needs – Le Gourmet Chef® → higher end housewares focused on cooking and entertaining n Widest variety of unique, high quality and affordable products in creative store
Slide 34: KC Key Strategy Overview
KC Key Strategy Overview n Focus: All your kitchen needs…for less n Build on solid core stores and close underperforming stores n Focus on outlets and selectively expand into traditional mall locations n Focus: Cook, eat, entertain n Prove new and enhanced format can meet targets n Phase out high re
Slide 35: KC Operational Highlights
KC Operational Highlights Store Count Sales Per Store 34
Slide 36: KC Financial Highlights
KC Financial Highlights Revenue Operating Income ($ in ($ in (Loss) millions) millions) (1) Cash Flow Before Financing Net Income (2) (Loss) ($ in millions) _____________________ (1) 2008 includes goodwill and other intangible asset impairment charges of $3.9 million, without which operating income
Slide 37: NACCO Industries Financial Update
NACCO Industries Financial Update
Slide 38: Q2 2012 Highlights and Outlook
Q2 2012 Highlights and Outlook Q2 2012 Results (1) ($ in millions) n NACoal experienced year-over-year net income growth due to higher earnings from unconsolidated project mines n and lower HBB operating experienced expenses along year-over-year with a gain in improvements on the net sale of aprimar
Slide 39: Why Invest in NACCO?
Why Invest in NACCO? NACCO represents a strong, multi-industry company with leading, well-positioned businesses in mining, small appliances and specialty retail n North American Coal has a unique business model: – Provides mining services primarily under long-term contracts which largely insulate NA
Slide 40: Appendix
\ — _ —- a _ LL NortHAmERICAN —_ —GOAL™~ Hamilton Beach CORPORATION Appendix
Slide 41: Risk Factors
Risk Factors The risks and uncertainties with respect to each subsidiary’s operations as referenced on page 1 of this document include, without limitation: North American Coal: (1) the successful integration of the Reed Minerals acquisition, (2) changes in the demand for and market prices of metallu
Slide 42: Risk Factors (continued)
Risk Factors (continued) The risks and uncertainties with respect to each subsidiary’s operations as referenced on page 1 of this document include, without limitation: Kitchen Collection: (1) changes in gasoline prices, weather conditions, the level of consumer confidence and disposable income as a
Slide 43: Non-GAAP Disclosure
Non-GAAP Disclosure EBITDA, net debt, cash flow before financing activities, return on total capital employed and net working capital are not measurements under U.S. GAAP, should not be considered in isolation or as a substitute for GAAP measures, and are not n necessarily EBITDA is defined comparab
Slide 44: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) 43
Slide 45: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) EBITDA reconciliation - NACCO excluding Hyster-Yale ($ in millions) 44
Slide 46: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) EBITDA reconciliation - by division ($ in millions) 45
Slide 47: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) Net Working Capital - Hamilton Beach Brands ($ in millions) 46
Slide 48: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) Cash Flow Before Financing ($ in millions)
Slide 49: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) ($ in millions) _____________________ (1) Tax rate of 38% represents the Company's target marginal tax rate compared with 2007's effective income tax rate of 20.6%. (2) Tax rate of 38% represents the Company's target marginal tax rate compared with 2008's effectiv
Slide 50: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) ($ in millions) _____________________ (1) Tax rate of 38% represents the Company's target marginal tax rate. 2009's effective income tax rate is not meaningful. (2) Tax rate of 38% represents the Company's target marginal tax rate compared with 2010's effective in
Slide 51: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) Return on Total Capital Employed - 2011 and LTM June 30, 2012 ($ in millions) _____________________ (1) Tax rate of 38% represents the Company's target marginal tax rate compared with 2011's effective income tax rate of 24.2%. (2) Tax rate of 38% represents the Co
Slide 52: Slide 52
Nacco Industries — Investor Presentation (September 2012) on 6ix