Hyster-yale, Inc. · NYSE:HY
Hyster-yale — Hyster-Yale Materials Handling — Investor Presentation (November 2015)
60 slides from Hyster-yale's investor presentation, Nov 6, 2015
Slide 1: Investor Presentation
Exhibit 99 Investor Presentation November 6, 2015
Slide 2: Presenters
Presenters • Alfred M. Rankin, Jr. Chairman, President and Chief Executive Officer of Hyster-Yale Materials Handling • Colin Wilson President and Chief Executive Officer of NACCO Materials Handling Group • Kenneth C. Schilling Senior Vice President and Chief Financial Officer 2
Slide 3: 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 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 5,400 employees globall
Slide 5: Our Businesses
Our Businesses Our Core Lift Truck Business Our New Hydrogen Power Business Organic growth through market share gain Rapid growth through development of technology 5
Slide 6: A Solid Investment Option
A Solid Investment Option Leading Products & Market Positions Customer Focused & Solutions Oriented Focused investment in capital goods sector with share gain and growth opportunities - in developed countries from exposure to Premier brands, comprehensive global goods movement, distribution and ware
Slide 7: 2015 Third Quarter Highlights
2015 Third Quarter Highlights ($ in millions) 2015 Third Quarter LTM 9/30/15 Consolidated Revenue $652.1 100.0% $2,643.8 100.0% Lift Truck Operating Profit 35.6 5.5% 131.2 5.0% Nuvera Operating Loss (6.6) (1.1)% (20.7) (0.8)% Consolidated Operating Profit 29.0 4.4% 110.5 4.2% Consolidated Net Income
Slide 8: Hyster-Yale Use of Cash Priorities
Hyster-Yale Use of Cash Priorities Investments in Core Lift Truck Business To support strategic initiatives to accelerate growth or enhance margins Investments in Share Gain Programs Investments to commercialize Nuvera’s technology Investments in Hydrogen Power Business Acquisitions of technologies
Slide 9: Lift Truck Industry Overview
Lift Truck Industry Overview Global Lift Truck Industry Size Global Lift Truck Industry Breakdown (Units) (units in thousands) Middle East & Long-term CAGR(2004– 2014)=4.5% Asia-Pacific Africa 8% 5% Europe 1,200 32% 900 Japan 8% 600 300 951 872 547 794 975 944 1,010 1,088 1,102 0 2007 2008 2009 2010
Slide 10: 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 11: Lift Truck Business Target Economics Goal and Gap to Target
Lift Truck Business Target Economics Goal and Gap to Target LTM 9/30/15 Gap to Target Economics Target Actual Lift Truck Operating Profit Margin 5.0% Economics 7% Goal Margin Variances (0.5%) gap closure Achieve minimum Unit margin 0.0% can be operating profit Parts/other (0.5%) achieved by… margin
Slide 12: Leverage Gained from Moving Volume to Full Manufacturing Capacity
Leverage Gained from Moving Volume to Full Manufacturing Capacity 100% 23% At Full Capacity: 115,000 units / year 50% Unused Capacity 0% Unit Volume LTM Q3 2015 2017-2018 25,000 units of additional volume $30 million fixed cost absorption by moving from current capacity utilization to full utilizati
Slide 13: Over the Remainder of this Market Cycle, Target Volumes Driven by…
Over the Remainder of this Market Cycle, Target Volumes Driven by… Growth of 15-20% by 2018-2019** Growth of 0-5% by 2016-2017** 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
Slide 14: Our Core Lift Truck Strategic Initiatives
Our Core Lift Truck Strategic Initiatives 14
Slide 15: Core Lift Truck Strategic Initiatives Update
Core Lift Truck 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 busin
Slide 16: Core Lift Truck Strategic Initiatives Update
Core Lift Truck Strategic Initiatives Update Initiative Strategic Objective Implementation Highlights Enhance Independent • Develop the strongest • Completed a major restructuring of independent, exclusive dealer network in North America that included Distribution a competitive conversion network •
Slide 17: Core Lift Truck Strategic Initiatives Update
Core Lift Truck Strategic Initiatives Update Initiative Strategic Objective Implementation Highlights Succeed in Asia • 5 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 Tru
Slide 18: Core Lift Truck Strategic Initiatives Update
Core Lift Truck Strategic Initiatives Update Initiative Strategic Objective Implementation Highlights Strengthen Sales and • Strengthen and align sales and • Recruited experienced individuals with Marketing Organization marketing organization in all deep knowledge of the lift truck business geograph
Slide 19: Our Hydrogen Power Business
Our Hydrogen Power Business Short Term Target N. America Lift Truck Market The Nuvera Story 140,000+ Fuel Cell Power penetration projected to triple by 2025 • Purchased for a small • Only one main competitor electric trucks investment amount in lift truck space sold per year • Investing pre-tax expe
Slide 20: Nuvera Products
Nuvera Products PowerTap® ~ Hydrogen Generator • Low fixed costs ideal for small to medium size lift truck fleets • Scalable to meet growth in customer demand • On site generation reduces supply chain risk PowerEdge® ~ Battery Replacements • Seamless integration into most Electric Lift Truck designs
Slide 21: The Nuvera Plan
The Nuvera Plan Phase 1 Phase 2 Phase 3 2015 - 2016 2016 – 2017 2017 – 2018 Develop PowerEdge ® units for Hyster-Yale dealer engagement 700 PowerEdge ® and 10 full range of electric lift trucks PowerTap® units per quarter at “Try-to-buy” PowerEdge ® program target margins achieves break- Build selli
Slide 22: Nuvera – Numerous Market Opportunities
Nuvera – Numerous Market Opportunities Across the Lift Truck Line • Class 1,2 & 3 solutions in 2015-2016 • Integrated engines for Big Truck and Class 4 & 5 in 2017-2019 Automotive • Growing market demand and OEM investment • Orion® 2 next generation power density is strong differentiator Constructio
Slide 23: Nuvera – Supporting Lift Truck Strategic Initiatives
Nuvera – Supporting Lift Truck Strategic Initiatives Low Cost of Ownership Low cost solution in heavy duty applications Understanding Customer Needs Increasing customer demand for battery alternative Improving Warehouse Position Market gaining momentum – Improve productivity Strong Independent Distr
Slide 24: Valuation Approach By Business
Valuation Approach 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 Operating Cash Invested in New Strong Operating Cash Generation Prod
Slide 25: Rationale for Investing in Hyster-Yale
Rationale for Investing in Hyster-Yale • Core business is a value business, generating strong cash returns over the cycle. Strong brands and solid customer base. – Opportunity for volume growth through industry share gains. – Strong, stable management with proven success record. • Nuvera offers sign
Slide 26: Appendix
Appendix 26
Slide 27: 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 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) Trailing 12 Year Ended December 31 Qtr. Months 2010 2011 2012 2013 2014 9/30/15 9/30/15 Reconciliation of EBITDA Net income attributable to stockholders $32.4 $82.6 $98.0 $110.0 $109.8 $20.9 $83.9 Noncontrolling interest income (loss) (0.1) – 0.1 0.2 0.4 0.1 0
Slide 29: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) ($ in millions) Reconciliation of Return on Total Capital Employed (ROTCE) 9/30/15 LTM LTM Average Stockholders' Equity (9/30/15, 6/30/15, 3/31/15, 12/31/14, and 9/30/14) $451.8 LTM Average Debt (9/30/15, 6/30/15, 3/31/15, 12/31/14, and 9/30/14) 41.1 LTM Average C
Slide 30: Cash Flow before Financing Calculation
Cash Flow before Financing Calculation Trailing 12 ($ in millions) Year Ended December 31 Months 2010 2011 2012 2013 2014 9/30/15 Reconciliation of Cash Flow before Financing Net cash provided by operations $47.5 $54.6 $128.7 $152.9 $100.0 $90.1 Net cash used for investing activities (8.5) (15.9) (1
Slide 31: Supplemental Information
Supplemental Information COMMITTED, GROWT'
Slide 32: 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 33: Hyster-Yale Global Footprint
Hyster-Yale Global Footprint 33
Slide 34: 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 35: 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 36: 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 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: 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 39: Historical Consolidated Revenue
Historical Consolidated Revenue ($ in millions) $3,000 $2,824 $2,767 $2,720 $2,666 $2,644 $2,489 $2,541 $2,469 $2,400 $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 September 30, 2015. 39
Slide 40: 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 41: Lift Truck Overview and Sources of Revenue
Lift Truck 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 p
Slide 42: The Customer
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 42
Slide 43: The Dealer
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 More than Strengthening the Committed 2,000 application partner co
Slide 44: Key Relationships…Our Financing Partners
Key Relationships…Our Financing Partners 44
Slide 45: Positive Environment to Gain Share and Margin Performance Over Next Two Years
Positive Environment to Gain Share and Margin Performance Over Next Two 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 segm
Slide 46: Lift Truck Business Operating Profit Trends and % of Sales
Lift Truck Business Operating Profit Trends and % of Sales ($ in millions) 7% TARGET 2.0% Prior Cycle Market Peak Mid-Cycle Market 5.5% Gap $150 Closure 5.0% $151.0(1) 5.0% $125 4.8% 4.5% $100 $134.3 $133.3(2) $131.2 $75 $111.7 2.1% $50 $57.3 $25 2007 2012 2013 2014 LTM Q3 2015 _____________________
Slide 47: 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 Improve Independent Design Low Cost of Dis
Slide 48: Core Lift Truck Strategic Initiatives
Core Lift Truck 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 acr
Slide 49: Core Lift Truck Strategic Initiatives
Core Lift Truck 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 pr
Slide 50: Core Lift Truck Strategic Initiatives
Core Lift Truck 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 righ
Slide 51: Core Lift Truck Strategic Initiatives
Core Lift Truck Strategic Initiatives Initiative Strategic Objective Key Elements Strengthen Sales and • Strengthen and align sales and • Greater accountability for results through smaller sales management areas Marketing Organization marketing organization in all • Leaders provided with new tools a
Slide 52: 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 53: 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 54: Nuvera Fuel Cells Business
Nuvera Fuel Cells Business Initiative Strategic Objective Key Elements Commercialize • Commercialize Nuvera’s • Acquired in December 2014 technology through introduction of • Strong patent portfolio Nuvera’s Fuel Cell new fuel cell and improved • Enables active participation in the Technology hydrog
Slide 55: 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 55
Slide 56: 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 57: Nuvera Orion Technology
Nuvera Orion® Technology Integrated Fuel Cell Hybrid Truck Battery Box Replacement 57
Slide 58: Economics: 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 59: 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 60: 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 140k+ units per year Batteries 750k+ unit population $18-20k lifetime spend Conventional $12k for 3 batteries Incremental Battery Customer Targets $6-8k for 1 ch
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