Hyster-yale, Inc. · NYSE:HY
Hyster-yale — Hyster-Yale Materials Handling — Q4 2018 Earnings Presentation
54 slides from Hyster-yale's earnings presentation, Feb 28, 2019
Slide 1: Q4 2018 Investor Presentation
Q4 2018 Investor Presentation Exhibit 99 Solutions that DRIVE Productivity
Slide 2: Safe Harbor Statement & Disclosure
Safe Harbor Statement & Disclosure This presentation includes forward-looking comments subject to important risks and uncertainties. It may also contain financial measures that are not in conformance with accounting principles generally accepted in the United States of America (GAAP). Refer to Hyste
Slide 3: Key Perspectives
Key Perspectives Global markets expected to be strong for next few years Investments to expand HY’s product and solutions portfolio and geographic breadth and depth Core lift truck programs aim to trigger organic growth through intensified industry and customer focus Nuvera remains a venture busines
Slide 4: Hyster-Yale at a Glance
Hyster-Yale at a Glance Hyster-Yale Materials Handling, Inc. (NYSE:HY) is a leading globally integrated, full-line lift truck manufacturer offering a broad array of solutions aimed at meeting the specific materials handling needs of its customers. _____________________ EBITDA and ROTCE are non-GAAP
Slide 5: Products for All Needs…
Forklifts Internal Combustion Engine Lithium-Ion Reach Stackers Very Narrow Aisle Trucks Products for All Needs… Electric Counterbalanced Rider Trucks Electric Narrow Aisle Trucks Electric Hand Trucks Internal Combustion Engine (cushion tire) Internal Combustion Engine (pneumatic tire) 3-wheel Elect
Slide 6: …with a Broad Range of Power Options, Attachments and Solutions
…with a Broad Range of Power Options, Attachments and Solutions Push Pulls Lifting Tables Electric Counterbalanced Rider Trucks Electric Narrow Aisle Trucks Electric Hand Trucks Internal Combustion Engine (cushion tire) Internal Combustion Engine (pneumatic tire) Fuel Cell Engine LPG & Bi-fuel Diese
Slide 7: Global Industry Remains Strong, but moderating in some areas
Global Industry Remains Strong, but moderating in some areas Long-term CAGR (2004 – 2018) = 5.7% _____________________ Source: ITA. Represents quarterly order intake. (units in thousands) Global Lift Truck Industry Size _____________________ Trend line represents 5.7% long-term CAGR Average Industry
Slide 8: Impact of Headwinds and Investments
Impact of Headwinds and Investments Key Variables Impacting Performance Impact on HY 2018 2019 Market Cycle by Country = _ Market Size by Industry + = Market Size by Product = = Commodity Prices/Tariffs _ _ Pricing = / - + Strength of Dollar _ _ Operational Effectiveness = + Core SG&A Expenses _ _ (
Slide 9: Lift Truck Business Target Economics
Lift Truck Business Target Economics Goal and Gap to Target Achieve 7% operating profit margin target over the medium term Achieve ROTCE > 20% Target Economics gap closure can be achieved with unit volume… Stronger Industry + Share Growth = Volume Leverage FY 12/31/18 Gap to Target Economics Actual
Slide 10: Global Supply Chains Trends – Customer Demands Driving New Solutions
Global Supply Chains Trends – Customer Demands Driving New Solutions Workforce availability Faster response Lower costs Environment E-commerce Electrification Automation/robotics Low cost country sourcing Wireless communications Big Data analytics Alternative energy Modular platforms Global sourcing
Slide 11: Our Strategies address Changing Landscape and will Drive Our Economic Engine
Our Strategies address Changing Landscape and will Drive Our Economic Engine Basic Business Areas Design Component commonality Supply Chain Manufacturing Quality Marketing Parts Infrastructure Capital requirements Hyster-Yale’s economic engine is driven by increasing unit volume and economies of sca
Slide 12: #1: Provide the Lowest Cost of Ownership, while Enhancing Productivity for Customers
#1: Provide the Lowest Cost of Ownership, while Enhancing Productivity for Customers New RS45 Reachstacker Segmentation – Right Product at Right Price Leads to Lower Cost of Ownership Constant power and refuel as quick as 3 minutes No batteries or battery charging rooms Environmentally clean Fuel Ce
Slide 13: #2: Be the Leader in the Delivery Industry- & Customer-Focused Solutions
#2: Be the Leader in the Delivery Industry- & Customer-Focused Solutions LOGISTICS FOOD & BEVERAGE MANU- FACTURING NATURAL RESOURCES & MATERIALS DURABLE GOODS SHORT-TERM RENTALS CONSUMER & BUSINESS TRADES Warehouse Counterbalanced Source: 2018 ITA Market Size and Mix by Vertical and Segment
Slide 14: Sales Deployment
Sales Deployment Top Buyers ~200 accounts Industry Leaders ~1500+ Accounts Rest of the Market 35% 40% Committed to customer-focused, industry-specific, strategic partnerships ~200 designated accounts with annual purchases of ~60,000 units and high market share Over 2,400 Customer and Dealer Visits p
Slide 15: #3: Be the Leader in the Attachments Business
#3: Be the Leader in the Attachments Business A complete range of attachments to serve material handling industries in the area of forest products, food and beverage, white goods, logistics, chemistry, automotive and many others… One of the worldwide leading manufacturers of lift truck attachments,
Slide 16: Bolzoni Strategy: Expand sales volumes
Bolzoni Strategy: Expand sales volumes 1. Expand in US market Clear path identified for enhancing the strategy to grow in the United States 2. Increase global volumes with new standard duty products and an industry focus Enhance people capabilities Produce a complete range of attachments locally Enh
Slide 17: #4: Be a Leader in fuel cells and their applications
#4: Be a Leader in fuel cells and their applications High technology fuel cell company Integrator of fuel cell engines into lift trucks Design of Fuel Cell Stacks and Engines Reliability Growth Engineering: strong focus on improving quality & increasing MTBF Manufacture of Fuel Cell Stacks and Engin
Slide 18: Non-Lift Truck Growth Opportunities
Non-Lift Truck Growth Opportunities Heavy duty applications Port equipment n Delivery vehicles n Buses China market entry Market research n Two agreements signed n Other opportunities in evaluation n Low cost sourcing
Slide 19: #5: Grow in Emerging Markets
#5: Grow in Emerging Markets MATURE MARKETS 820,909 EMERGING MARKETS 698,836 M A R K E T S I Z E S U B – T O T A L S Indicative Map Only: Company’s estimate of market type Emerging versus Mature Lift Truck Market Size (Last 12 months) Top Global Manufacturers are increasing product depth into utilit
Slide 20: Acquired a 75% Interest in Hyster-Yale Maximal Forklift [Zhejiang] Co., Ltd.
Acquired a 75% Interest in Hyster-Yale Maximal Forklift [Zhejiang] Co., Ltd. Management Culture Local market experience Production and design capability Facilities and location Brand and distribution network Utility Counterbalance forklifts Big Trucks Rough Terrain forklifts Side Loader forklift Org
Slide 21: #6: Be the Leader in Independent Distribution
#6: Be the Leader in Independent Distribution Enhancing performance Dealer Excellence programs Dealer incentives Term-based contracts 1,000+ global dealer locations 2,000+ application consultants 10,000+ service technicians Independent n Exclusive n Entrepreneurial n Profitable n Committed partner n
Slide 22: Path to Execution of Strategic Initiatives
Path to Execution of Strategic Initiatives In total, Hyster-Yale projects maturing over the next 1 to 4 years are transformative and have the objective of driving revenue and profitability to target New Utility Products New Standard Products New Premium Products HY Maximal Integration BBR Range Expa
Slide 23: Results for Q4 2018 Consolidated vs. Q4 2017
($ in millions) Results for Q4 2018 Consolidated vs. Q4 2017 23 _____________________ These entities are presented on a stand-alone basis, and as such, do not sum to the Consolidated financial information. EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for
Slide 24: Hyster-Yale Use of Cash Priorities
Hyster-Yale Use of Cash Priorities Expense and Capital Investments in Strategic initiatives to accelerate growth or enhance margins Acquisitions of technologies and other forklift-related businesses Investments to commercialize Nuvera’s fuel cell technology 2016 2017 2018 Annual Dividends (1) $19.2m
Slide 25: Valuation Approach Needs to Vary By Business
Valuation Approach Needs to Vary By Business Lift Truck and Attachment Businesses Fuel Cell Business Board Oversight as Separate Businesses Incentives Tied to Individual Businesses Strong Operating Cash Generation Market Leading Products and Position Mature Cyclical Industry Value using Traditional
Slide 26: In Summary, a compelling investment scenario
by selling and producing 115,000 HY-factory trucks (excluding HY Maximal) In Summary, a compelling investment scenario with many projects coming to completion over the next few years Get to approximately $4 billion HY Lift Truck segment revenue irrespective of industry size and maintain ROTCE >20% t
Slide 27: Financial Appendix
Financial Appendix HYSTER-YALE Solutions that DRIVE Productivity Oy MATERTATSTHANOUTS
Slide 28: Non-GAAP Disclosure
Non-GAAP Disclosure EBITDA and return on total capital employed are not measurements under U.S. GAAP, should not be considered in isolation or as a substitute for GAAP measures, and are not necessarily comparable with similarly titled measures of other companies. Hyster-Yale defines each as the foll
Slide 29: Non-GAAP Reconciliation EBITDA
Non-GAAP Reconciliation EBITDA _____________________ Note: EBITDA in this investor presentation is provided solely as a supplemental disclosure with respect to operating results. EBITDA does not represent net income (loss), as defined by U.S. GAAP and should not be considered as a substitute for net
Slide 30: Non-GAAP Reconciliation EBITDA (continued)
Non-GAAP Reconciliation EBITDA (continued) ($ in millions) Bolzoni 2016 2017 2018 12/31/2017 12/31/2018 Reconciliation of EBITDA Net income (loss) attributable to stockholders $ (0.3) 3.9 $ 5.8 $ 0.6 $ 0.4 $ Noncontrolling interest income - 0.7 0.5 0.2 0.1 Income tax provision (benefit) (0.4) 1.0 2.
Slide 31: Non-GAAP Reconciliation ROTCE
Non-GAAP Reconciliation ROTCE _____________________ Note: Return on capital employed is provided solely as a supplemental disclosure with respect to income generation because management believes it provides useful information with respect to earnings in a form that is comparable to the Company’s cos
Slide 32: Cash Flow before Financing Calculation
Cash Flow before Financing Calculation Consolidated ($ in millions) Year Ended December 31 2014 2015 2016 2017 2018 Reconciliation of Cash Flow before Financing Net cash provided by (used for) operating activities $100.0 $89.4 $(48.9) $164.7 $67.6 Net cash used for investing activities (44.4) (31.3)
Slide 33: Supplemental Information
Supplemental Information F rp @) HYSTER-YALE Solutions that DRIVE Productivity MATERIALS HANDLING
Slide 34: The History of Hyster-Yale and Its Brands
Hyster founded in Portland, Oregon as the Willamette Ersted Company 1929 1944 1959 Company name officially changed to Hyster Company First Hyster container handling trucks 1875 1920 Yale Lock Mfg. broadens its scope into materials handling Yale and Towne launched a new battery powered low-lift platf
Slide 35: Hyster-Yale’s Global Footprint
Hyster-Yale’s Global Footprint Ramos Arizpé, Mexico Fabrication Manufacture Sulligent, Alabama Component Manufacture Berea, Kentucky Lift Truck Manufacture Greenville, North Carolina Division Headquarters; Lift Truck Manufacture; Warehouse Development Center Cleveland, Ohio Corporate Headquarters Da
Slide 36: Overview and Sources of Revenue
Overview and Sources of Revenue A leading global lift truck manufacturer in terms of units sold #4 Globally in 2017 Large installed lift truck base that drives parts sales Over 840,000 units worldwide at 12/31/18 HY sales of ~ 102,000 lift truck units in 2018 ~90,200 units sold – produced in HY plan
Slide 37: Historical Consolidated Revenue
Historical Consolidated Revenue ($ in millions)
Slide 38: Industry Units by Geography
Industry Units by Geography Lift Truck Unit Class Shipments _____________________ Source: Company: FY 12/31/18 Units Shipped Note: Units sold direct by SN JV are not included HY Lift Truck Units Sold by Geography _____________________ Source: WITS. LTM 12/31/18 Orders Reports. _____________________
Slide 39: Secular Shift in Product Mix
Secular Shift in Product Mix Market 2018 _____________________ Source: WITS. Orders Reports. ICE = Internal Combustion Engine Utility = HYG Estimates DRIVERS: Customer shift Growth of warehousing and logistics Environmental, health and safety Evolving technologies Growth in emerging markets Previous
Slide 40: Global Lift Truck Market Rates of Change
Japan Western Europe Eastern Europe Brazil North America Middle East & Africa Latin America (excluding Brazil) Asia (excluding China & Japan) China ( 3 & 12 months rate of change trend) Global Lift Truck Market Rates of Change _____________________ Source: WITS. Bookings Reports.
Slide 41: Lift Truck Market Size Data
Lift Truck Market Size Data Lift Truck Market Size Data ae a oe [-aresay [-snass| sar | 380,557| 445,583 411,107| 222,683| 299,387 [-see'205 426-192] 198/058 ~212.959| —tat-384| 159,279 96.958| 136/050] 169.569 |t98.474|200;295| 221 155| 42, 96| 234.383] —200.176| 18.835 1e0.903|_274.50t | 158:0eel
Slide 42: Our Long-Term Philosophy
Our Long-Term Philosophy Long-term growth Long-term shareholders Shareholder protection Senior management incentivized as long-term shareholders Increase shareholder value Return on Capital Employed and Market Share Increase focus
Slide 43: Our Investment in R&D
Our Investment in R&D Lift Truck R&D Investment 2.6% 2.7% 2.9% 2.9% 2.9% % of Revenue $ in millions Product Development Target - 2.5% of Sales Actions to Achieve Target Increase revenue Modular architecture India and China development centers Process automation Co-located suppliers
Slide 44: Building a Platform to Grow in Emerging Markets with Hyster-Yale Maximal
Building a Platform to Grow in Emerging Markets with Hyster-Yale Maximal Forklift [Zhejiang] Co., Ltd. Established in 2006 in Fuyang District / Founder: Mr. JinHong Lu 600 employees and 1.4 million ft2 office and factory Original Equipment Manufacturer with design, manufacture, sales and service ope
Slide 45: Near Term Synergy Plan
Near Term Synergy Plan Consolidate existing China operations Insource and expand manufacturing Leverage low cost sourcing Introduce HY expertise Implement HY best practices Emerging Market Development Center Fuyang, China HY Independent Global Distribution Maximize coverage Maintain two channels to
Slide 46: Projected Investment Return Update
Projected Investment Return Update Current Estimate Investment Case *Graphic does not include impact of the $10M incentive payout Impact on Annual Global Hyster-Yale Earnings Current estimate based on: 2018 after tax performance, including purchase price accounting adjustments 2019-2023 after-tax ea
Slide 47: Bolzoni Revenue by Product Line – FY 2018
Bolzoni Revenue by Product Line – FY 2018 Other Revenues 5% Forks 15% Lift Table 5% Attachments 75% $200.9M
Slide 48: Bolzoni Strategy: Enhance Strong OEM Relationships
Managed as separate business segment Bolzoni Strategy: Enhance Strong OEM Relationships Lift Truck Manufacturers – OEM Lift Truck & Material Handling Dealers 2018 CUSTOMER MIX Separation to maintain OEM information integrity Sales outside of Italy = 87.3% of 2018 Global Sales
Slide 49: Bolzoni Strategy: Synergies with HY
Bolzoni Strategy: Synergies with HY Develop Bolzoni as global supplier of attachments & forks to HY globally Accelerate growth of attachment business in North America Leverage Bolzoni manufacturing capacity Achieve procurement and logistics cost savings Increase sales of HY forklift & Bolzoni attach
Slide 50: Fuel Cell Solution Growth Opportunities
Fuel Cell Solution Growth Opportunities N. America electric trucks sold per year 175,000+ 25-50% Estimated up to can benefit from fuel cell solutions Global 850,000+ electric trucks sold per year DOE reported North America (1) Population of Fuel Cell Powered Lift Trucks in North America Trend in pop
Slide 51: Business Development Approach
Business Development Approach Nuvera Integrators OEM’s Speed to Market Close to customer Quality Control Control of IP Long term partnership Custom design and development IP Transfer/ sharing Economies of scale L3 Fuel Cell Hybrid Vehicle L2 Fuel Cell Engine L1 Fuel Cell Module L0 Fuel Cell Stack L3
Slide 52: Expansion of Product Line
Expansion of Product Line Demonstration in critical port application in California Performance benefits Metal plates – higher durability High power density Open flow field – improved fuel efficiency Modular, easily integrated solution 2019 Heavy duty engine Leverage experience from HY supply Scale u
Slide 53: China Market Research and Engagement
China Market Research and Engagement Engaged China-based market research and segmentation study Significant government incentives driving market interest Several companies are early entrants, but market open to other partners Nuvera technology is a strong fit at a competitive cost Engaging with the
Slide 54: A Solid Investment Option
A Solid Investment Option HYSTER-YALE Strong Balance Sheet Cash Generation & Commitment to Shareholder Return Investment & Growth in Game Changing Technologies Leading Products & Market Position Strategies to Gain Share in all Segments & Markets Customer Focused & Solutions Oriented Strong Return on
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