Hyster-yale, Inc. · NYSE:HY
Hyster-yale — Hyster-Yale Materials Handling — Investor Presentation (September 2015)
61 slides from Hyster-yale's investor presentation, Sep 2, 2015
Slide 1: Investor Presentation
Exhibit 99 Investor Presentation September 2, 2015
Slide 2: Safe Harbor Statement
Safe Harbor Statement The following information includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any and all statements regarding the Company’s expected future financia
Slide 3: Our Core Business is Materials Handling
Our Core Business is Materials Handling 3
Slide 4: Hyster-Yale Snapshot
Hyster-Yale Snapshot Hyster-Yale Materials Handling, Inc. (NYSE:HY) Leading global designer, manufacturer and marketer of lift trucks and provider of aftermarket parts and support Headquartered in Cleveland, Ohio Separate lift truck and fuel cell power solutions segments Over 5,500 employees globall
Slide 5: Industry Overview
Industry Overview Global Lift Truck Industry Size Global Lift Truck Industry Breakdown (Units) Asia-Pacific Middle East & (units in thousands) Africa Long-term CAGR (2004 2014) – = 4.5% 7% 4% Japan 1,200 8% 900 Europe 600 33% 300 951 872 547 794 975 944 1,010 1,088 1,108 0 Americas 2007 2008 2009 20
Slide 6: Lift Truck Industry – Unit Distribution by Class
Lift Truck Industry – Unit Distribution by Class Total Industry = 1,108k Units Estimated Industry Revenue Mix Class 1 Class 1 Electric Electric 17% 18% Class 5 ICE Class 2 Class 5 Class 2 39% Electric Electric 10% ICE 11% 58% Class 3 Class 3 Electric Electric 31% 8% Class 4 Class 4 ICE ICE 3% 5% Mar
Slide 7: Hyster-Yale's Economic Engine
Hyster-Yale’s Economic Engine Hyster-Yale’s economic engine is driven by increasing unit volume as our “hedgehog” approach gets embedded in all our activities and our flywheels increase momentum… Worldwide Distribution Geographic Volume Strength to Drive and Product Economies Design Market Share Bal
Slide 8: Over the next three years…
Over the next three years…. Get to 115,000 Lift trucks irrespective of industry size A period of Use of cash to support Use of cash to share growth technology accelerators support strategic Fuel Cells Automation Telemetry alliances 8
Slide 9: Operating Profit at the peak of this cycle
Lift Truck Business 7% 7% With adequate volume growth we can meet our Operating public Operating Profit at the operating Profit at the peak of this profit mid-point of cycle commitments the next cycle 9
Slide 10: Lift Truck Business: operating profit opportunity
Lift Truck Business 25,000 $30 million units of additional fixed cost absorption by moving from volume current capacity utilization to full utilization of our manufacturing capacity $35-$40 million $65-$70 by meeting target economics in standard million margin net of increased SG&A spread over more
Slide 11: Lift Truck Business Operating Profit Trends and % of Sales
Lift Truck Business Operating Profit Trends and % of Sales ($ in millions) 7% TARGET 2.1% Prior Cycle Market Peak Mid-Cycle Market 5.5% Gap $150 Closure 5.0% $151.0 (1) 4.9% $125 4.8% 4.5% $134.3 $133.3(2) $131.9 $100 $111.7 $75 2.1% $50 $57.3 $25 2007 2012 2013 2014 LTM Q2 2015 ____________________
Slide 12: Lift Truck Business Target Economics Goal and Gap to Target
Lift Truck Business Target Economics Goal and Gap to Target LTM 6/30/15 Gap to Target Economics Target Actual Lift Truck Operating Profit Margin 4.9% Economics 7% Goal Margin Variances (0.1%) gap closure Achieve minimum Unit margin 0.6% can be operating profit Parts/other (0.7%) achieved by… margin
Slide 13: Leverage Gained from Moving Volume to Full Manufacturing Capacity
Leverage Gained from Moving Volume to Full Manufacturing Capacity 100% 31% 33% 25% 24% 24% 80% 48% 60% Unused Capacity 40% Unit Volume 20% 0% 2010 2011 2012 2013 2014 LTM Q2 15 2017-2018 Objective of minimum 25,000 unit volume Approximately $125m manufacturing fixed cost increase from 2014 levels Ab
Slide 14: Over the Remainder of this Market Cycle, Target Volumes Driven by…
Over the Remainder of this Market Cycle, Target Volumes Driven by… EMEA Industry Americas Industry 500 300 400 250 200 300 150 200 100 Actual Prior Peak Actual Prior Peak 50 100 2009 2010 2011 2012 2013 2014 2015* 2009 2010 2011 2012 2013 2014 2015* Growth of 15-20% by 2018-2019** Growth of 0-5% by
Slide 15: Our Core Strategies
ur Core Strategies Nuvera 1F Commersialization
Slide 16: Core Strategic Initiatives
Core Strategic Initiatives Core strategic initiatives were designed to drive the economic engine by increasing share… Worldwide Geographic Volume Distribution and Product Economies Strength to Drive Balance of Scale Market Share Basic Business Areas Enhance Independent Improve Design Low Cost of Dis
Slide 17: Core Strategic Initiatives Update
Core Strategic Initiatives Update Initiative Strategic Objective Implementation Highlights Understand • Provide the right product and • Increasing penetration of the Customer Needs solution to meet the specific Metals and Paper segments needs of different customers • Gained conquest business at two
Slide 18: Core Strategic Initiatives Update
Core Strategic Initiatives Update Initiative Strategic Objective Implementation Highlights Enhance Independent • Develop the strongest • Announced a major restructuring of independent, exclusive dealer network in North America that included Distribution a competitive conversion network • Growth of o
Slide 19: Core Strategic Initiatives Update
Core Strategic Initiatives Update Initiative Strategic Objective Implementation Highlights Succeed in Asia • 4 new dealers appointed in 2015 • Expand market penetration • Direct sales support on large accounts throughout Asia is resulting in sales to conquest accounts • Additional Big Truck sales by
Slide 20: Core Strategic Initiatives Update
Core Strategic Initiatives Update Initiative Strategic Objective Implementation Highlights • Recruited experienced individuals with deep Strengthen Sales and • Strengthen and align sales and knowledge of the lift truck business Marketing Organization marketing organization in all • Added expertise i
Slide 21: Positive Environment to Gain Share and Margin Performance Over Next Three Years
Positive Environment to Gain Share and Margin Performance Over Next Three Years • Product gaps filled to position Hyster-Yale in most application segments and improve margins • Second-tier competitors in the ICE segment more vulnerable due to their weak economies of scale position • Key warehouse se
Slide 22: Core Strategic Initiatives – Stages of Momentum
Core Strategic Initiatives – Stages of Momentum Our core strategic initiative flywheels are in various stages of momentum. Share gain is expected to take place as they gain Achieved momentum… Early Stage Mid Stage Breakthrough Understand Customer Needs Low Cost of Ownership Enhance Independent Distr
Slide 23: 2015 Second Quarter Highlights
2015 Second Quarter Highlights ($ in millions) 2015 Second Quarter LTM 6/30/15 Consolidated Revenue $658.7 100.0% $2,687.5 100.0% Lift Truck Operating Profit 33.2 5.0% 131.9 4.9% Nuvera Operating Loss (5.9) (0.9)% (14.1) (0.5)% Consolidated Operating Profit 27.3 4.1% 117.8 4.4% Consolidated Net Inco
Slide 24: Substantial Cash Being Returned to Stockholders
Substantial Cash Being Returned to Stockholders Stockholder Returns Quarterly dividend established in November 2012 $50 million stock repurchase program announced in December 2012 – Completed in 2014 2013 2014 2015 (YTD) $16.7m $17.8m $9.2m Annual Dividends (1) $1.00/share $1.10/share $1.14/share 20
Slide 25: HY Expects Continued Strong Cash Generation
HY Expects Continued Strong Cash Generation Potential Uses of Cash… Investments in core business to support strategic initiatives to accelerate growth or enhance margins As appropriate, return capital to stockholders through dividends and periodically through share repurchases Look for opportunities
Slide 26: Unlocking Value By Business
Unlocking Value By Business Lift Truck Business Fuel Cell Business Mature Cyclical Industry Developing / Technology Industry Distinct Technology / Patents in Fuel Market Leading Products and Position Cell and Hydrogen Generation Strong Operating Cash Generation Operating Cash Invested in New Product
Slide 27: Rationale for Investing in Hyster-Yale
Rationale for Investing in Hyster-Yale • Leading position in growing industry benefiting from globalization and long-term worldwide economic recovery and development • Premier brands, comprehensive global product line and exclusive, global independent distribution network • Strong economic engine dr
Slide 28: Appendix
Appendix COMMITTED... GROWTH
Slide 29: Non-GAAP Disclosure
Non-GAAP Disclosure Adjusted Lift Truck Business Operating Profit, EBITDA and return on total capital employed are not measurements under U.S. GAAP, should not be considered in isolation or as a substitute for GAAP measures, and are not necessarily comparable with similarly titled measures of other
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) Trailing 12 Year Ended December 31 Qtr. Months 2010 2011 2012 2013 2014 6/30/15 6/30/15 Reconciliation of EBITDA Net income attributable to stockholders $32.4 $82.6 $98.0 $110.0 $109.8 $22.7 $91.4 Noncontrolling interest income (loss) (0.1) – 0.1 0.2 0.4 0.1 0
Slide 31: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) ($ in millions) Reconciliation of Return on Total Capital Employed (ROTCE) 6/30/15 LTM LTM Average Stockholders' Equity (6/30/15, 3/31/15, 12/31/14, 9/30/14 and 6/30/14) $459.9 LTM Average Debt (6/30/15, 3/31/15, 12/31/14, 9/30/14 and 6/30/14) 40.1 LTM Average Cas
Slide 32: Cash Flow before Financing Calculation
Cash Flow before Financing Calculation Trailing 12 ($ in millions) Year Ended December 31 Months 2010 2011 2012 2013 2014 6/30/15 Reconciliation of Cash Flow before Financing Net cash provided by operations $47.5 $54.6 $128.7 $152.9 $100.0 $110.8 Net cash used for investing activities (8.5) (15.9) (
Slide 33: Supplemental Information
Supplemental Information COMMITTED,. GROWTH
Slide 34: Overview and Sources of Revenue
Overview and Sources of Revenue Key Highlights • Leading global lift truck manufacturer in terms of units sold • Diverse customer and application base – #3 globally in 2014 • Global independent dealer network – Large installed base that drives parts sales • Comprehensive, updated global product line
Slide 35: Hyster-Yale Global Footprint
Hyster-Yale Global Footprint 35
Slide 36: Hyster-Yale Is a True Full Line Supplier
Hyster-Yale Is a True Full Line Supplier CLASS 1 CLASS 2 CLASS 3 CLASS 4 CLASS 5 Electric Internal Internal Electric Narrow Electric Hand Counterbalanced Combustion Engine Combustion Engine Aisle Trucks Trucks Rider Trucks (cushion tire) (pneumatic tire) 1.0T to 5.5T 1.5T to 6.0T 1.5T to 8.0T 1.0T t
Slide 37: Our Long-Term Philosophy
Our Long-Term Philosophy Long-term Long-term Shareholder Senior Increase growth shareholders protection management shareholder incentivized as value long-term Return on Capital shareholders Employed and Market Share Increase focus 37
Slide 38: The History of Hyster-Yale and its brands
The History of Hyster-Yale and its brands 1875 Yale Lock Mfg. broadens its scope into materials handling 1929 Hyster founded in Portland, Oregon as the Willamette Ersted Company 1944 Company name officially changed to Hyster Company 1963 Yale forklift truck business merges with Eaton Mfg. Industrial
Slide 39: The Transition
The Transition Maturity of key programs designed to put Three years us in the position of having the right ago the products at the right cost and right quality company Commitment to the marketing and reached support programs which can enable a period of share gain a key transition Hyster-Yale spin-o
Slide 40: Our Business Has Been Transformed
Our Business Has Been Transformed Product Range Manufacturing Comprehensive, updated product line Globally integrated, lean operations with economies of scale Average product age since last upgrade – less than 4 years Assembled in market of sale Designed to meet customer needs Continuous efficiency
Slide 41: Our Business Has Been Transformed
Our Business Has Been Transformed Supply Chain Quality Aftermarket Centralized supply chain Customer driven High first time fill % management programs Comprehensive all Highly flexible low cost North America’s warranty makes parts program supply chain rates reduced significantly over the last Strong
Slide 42: Mission Statement Redefined
Mission Statement Redefined Our transition had its roots in our initiation of the Good to Great strategic thinking process in 2010 which began with a redefinition of our mission statement Be a leading globally integrated designer, manufacturer and marketer of a complete range of high quality, applic
Slide 43: The Basic Philosophies That Guide Our Actions
The Basic Philosophies That Guide Our Actions Customer Distribution Internal Global supplier of lift Market through exclusive, Full line product supplier to meet the trucks and related independent, certified needs of major customer segments services distribution Modular/scalable components to create
Slide 44: Key Relationships…Our Customers
Key Relationships…Our Customers Blue Chip Customer Base The Customer Direct to customer sales to major accounts Account Identification Understanding Teams Customer Needs Solutions Groups Special Application teams Global Account teams Investment in global CRM system 44
Slide 45: Key Relationships…Our Dealers
Key Relationships…Our Dealers The Dealer Enhancing performance Over 1,000 Independent global dealer Dealer Excellence programs locations Dealer incentives Exclusive Strong Term-based contracts Independent Entrepreneurial Distribution Committed More than Strengthening the 2,000 application distributi
Slide 46: Key Relationships…Our Financing Partners
Key Relationships…Our Financing Partners 46
Slide 47: Core Strategic Initiatives
Core Strategic Initiatives Initiative Strategic Objective Key Elements Understand • Provide the right product and • Segmentation of products and industries Customer Needs solution to meet the specific • Development of Utility, Standard and needs of different customers Premium products across multipl
Slide 48: Core Strategic Initiatives
Core Strategic Initiatives Initiative Strategic Objective Key Elements Enhance Independent • Develop the strongest • Develop all dealers Distribution independent, exclusive dealer • Appoint / convert successful dealers network • Expand number of dual line dealers • Enhance dealer value proposition •
Slide 49: Core Strategic Initiatives
Core Strategic Initiatives Initiative Strategic Objective Key Elements Succeed in Asia • Expand market penetration • Organic growth through development of throughout Asia dealer network and direct selling capabilities • Development of long term strategic partnerships • Development of right products
Slide 50: Core Strategic Initiatives
Core Strategic Initiatives Initiative Strategic Objective Key Elements • Greater accountability for results through smaller Strengthen Sales and • Strengthen and align sales and sales management areas Marketing Organization marketing organization in all • Leaders provided with new tools and enhanced
Slide 51: Key Business Areas – Stages of Momentum
Key Business Areas – Stages of Momentum We believe momentum is gaining in all key Achieved areas of the business… Early Stage Mid Stage Breakthrough Product Improvement Supply Chain Manufacturing Quality Pricing Dealer Structure and Excellence Area Sales Management Account Identification and Coverag
Slide 52: Our Competitive Advantages
Our Competitive Advantages Customer Relationships Global • Long relationships • Able to meet customers needs globally • Able to meet most needs • Global economies of scale • National Account programs Full Product Line Dealer Relationships • Independent distribution model • New investment in alternat
Slide 53: Why Nuvera? Nuvera's Products – The Total Power Solution
Why Nuvera? Nuvera’s Products – The Total Power Solution ™ NMHG + Nuvera: One stop for your hydrogen and fuel cell needs… ELECTRIC INDUSTRIAL GENERATION DELIVERY POWER MOBILITY 53
Slide 54: Complementary Strengths
Complementary Strengths Driven by Needs of Technology Customers Supply Chain Management Innovation Focus on being a “Good Partner” Understand Lift Truck Patent Portfolio Requirements Robust Product Designs Hydrogen Value Chain Product Commercialization Warehouse Equipment Total Power Solution™ Distr
Slide 55: Nuvera Technology
Nuvera Technology Patents across hydrogen value chain Fuel cell stack a strong fit for industrial mobility • Metallic cell structure for robustness • Open flow field for high power density Steam methane reformation based hydrogen generation • On-site appliance • Efficient and durable solution Future
Slide 56: Nuvera Orion Technology
Nuvera Orion® Technology Gen1 Integrated Fuel Cell Hybrid Truck Battery Box Replacement Gen2 56
Slide 57: Fuel Cell System vs. Batteries
Fuel Cell System vs. Batteries Productivity Floor space Increase Utilization Time saved refueling and Recapture battery storage and changing batteries charging floor space Economics Significant ROI* Constant Power Environmentally Power throughout shift and Clean improved truck electronic life Minima
Slide 58: Capturing More Lifecycle Value
Capturing More Lifecycle Value Lead Acid Battery* PowerEdge® Solution* Energy Utility Company Utility Company Energy Fuel (PowerTap) Nuvera/Dealer NMHG/Dealer Maint Maint NMHG/Dealer Batteries Battery Supplier & Charger PowerEdge Nuvera Eligible for NMHG/HY Truck 30% US Tax Truck NMHG/HY Credit(1) *
Slide 59: Near-Term Fuel Cell Opportunity
Near-Term Fuel Cell Opportunity Market Economics HY Revenue Battery replacement for Class 1, 2, and 3 electric trucks North America Market 135k units in 2014 Batteries 750-1,000k unit Population $18-20k lifetime spend Conventional $12k for 3 batteries Battery Incremental Customer Targets $6-8k for 1
Slide 60: Historical Revenue
Historical Revenue ($ in millions) $3,000 $2,824 $2,767 $2,688 $2,720 $2,666 $2,541 $2,469 $2,400 $2,489 $2,057 $2,000 $1,780 $1,802 $1,475 $1,000 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (1) _____________________ LTM (1) As of June 30, 2015. 60
Slide 61: Key Operating Expense Investments
Key Operating Expense Investments Strategic Programs for the Forklift Nuvera Key Development Truck Business Investments Strategic Programs PowerEdge® Understand the Needs of the Customer Battery box fuel cell replacements powered by Orion ®1 Fuel Cells Low Cost of Ownership Crack the Code in Warehou
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