Nacco Industries, Inc. · NYSE:NC
Nacco Industries — Investor Presentation (August 2004)
49 slides from Nacco Industries's investor presentation, Aug 13, 2004
Slide 1: NACCO Industries, Inc. Background & Strategy
NACCO Industries, Inc. Managing for long-term profit growth Background & Strategy August 13, 2004
Slide 2: Forward-Looking Statement Disclaimer
Forward-Looking Statement Disclaimer The statements contained in this presentation that are not historical facts are "forward-looking statements" and are made subject to certain risks and uncertainties which could cause actual results to differ materially from those presented herein. You are caution
Slide 3: Table of Contents
Table of Contents NACCO Industries, Inc. Overview Corporate Oversight and Governance NACCO Materials Handling Group, Inc. (NMHG) NACCO Housewares Group Hamilton Beach^Proctor-Silex, Inc. (HB/PS) The Kitchen Collection, Inc. (KCI) The North American Coal Corporation Investment Considerations Summary
Slide 4: NACCO Industries, Inc. Overview
NACCO Industries, Inc. Overview NACCO Industries, Inc. is an operating holding company with three principle businesses: lift trucks, housewares and lignite coal mining In 2003, total revenues were $2.5 billion and net income was $52.8 million NACCO's overall goal is to increase shareholder value by
Slide 5: NACCO Industries Overview
HAMILTON BEACHwPROCTOR-SILEX NACCO Materials Handling Group, Inc. The North American Coal Corporation The Kitchen Collection, Inc. NACCO Industries Overview Hamilton Beach^ Proctor-Silex, Inc. NACCO Housewares Group
Slide 6: NACCO Industries, Inc. Overview
NACCO Industries, Inc. Overview NACCO Industries, Inc. The North American Coal Corporation (NAC) NACCO Housewares Group NACCO Materials Handling Group, Inc. (NMHG) NMHG Wholesale NMHG Retail The Kitchen Collection, Inc. (KCI) Hamilton Beach^Proctor-Silex, Inc. (HB/PS) 2003 Sales: $2,472.6 Net Income
Slide 7: Table of Contents
Table of Contents NACCO Industries, Inc. Overview Corporate Oversight and Governance NACCO Materials Handling Group, Inc. (NMHG) NACCO Housewares Group Hamilton Beach^Proctor-Silex, Inc. (HB/PS) The Kitchen Collection, Inc. (KCI) The North American Coal Corporation Investment Considerations Summary
Slide 8: Prudent Corporate Oversight and Overall Corporate Strategy
Carries out public company responsibilities Provides value-added consulting services Staff of about 40 Maximize after-tax return to shareholders Deploy free cash flow into: Reinvestment in the businesses Debt reduction Acquisitions Share repurchases Regular dividend increases, depending on the Compa
Slide 9: NACCO Maintains a Long-Term Perspective
NACCO Maintains a Long-Term Perspective Four Guiding Principles: Highly professional management teams Industry-leading operational effectiveness and efficiencies Industry-leading market positions Sustainable competitive advantage positions Oversight Ensure subsidiary management excellence Enhance st
Slide 10: Established Corporate Governance Program
Established Corporate Governance Program Four key elements which have largely been in place for a decade or more*: Strong, independent board of directors to ensure effective oversight Reinforced by subsidiary company structures Each with its own CEO Each with separate, independent board of directors
Slide 11: Executive Compensation
NACCO board exercises strong control over strategic business unit compensation Management incentives aligned with shareholder interests Strong link between compensation and company performance No stock options 4 components: Base salary; perquisites converted to cash compensation Short-term incentive
Slide 12: Clear Financial Goals for Subsidiary Companies
Clear Financial Goals for Subsidiary Companies Achieve a minimum long-term operating profit target of 9 percent by 2007-2008 Generate substantial cash flow before financing activities NACCO Materials Handling Group, Inc. Achieve a minimum operating profit target of 10 percent by 2005-2006 Generate s
Slide 13: Table of Contents
Table of Contents NACCO Industries, Inc. Overview Corporate Oversight and Governance NACCO Materials Handling Group, Inc. (NMHG) NACCO Housewares Group Hamilton Beach^Proctor-Silex, Inc. (HB/PS) The Kitchen Collection, Inc. (KCI) The North American Coal Corporation Investment Considerations Summary
Slide 14: NACCO Materials Handling Group, Inc.
NACCO Materials Handling Group, Inc. To be the leading globally integrated designer, manufacturer and marketer of a complete range of high-quality lift trucks Vision Overview NMHG Wholesale: Designs, engineers, manufactures, sells and services a comprehensive line of lift trucks and aftermarket part
Slide 15: Key Investment Considerations
Key Investment Considerations Leading Global Lift Truck Manufacturer Strong Brands Leading market share positions with large installed population base Comprehensive global product line undergoing significant redesign Globally integrated operations with significant economies of scale Power of Hyster(
Slide 16: Leading Brands and Market Shares
Leading Brands and Market Shares Hyster(r) and Yale(r) among the most recognized brands in the lift truck industry #1 market position in North America, #3 worldwide Both brands more than 70 years in business Strong heritage customer base in complementary market segments Hyster(r) - large, heavy-duty
Slide 17: Comprehensive Product Line
Comprehensive Product Line NMHG
Slide 18: Global Scope of Operations
Sao Paolo, Brazil Ramos Arizpe, Mexico Sulligent, AL Portland, OR (Global HQ) Danville, IL Berea, KY Irvine, Scotland Nijmegen, The Netherlands Craigavon, N. Ireland Fleet, England Greenville, NC Modena, Italy Masate, Italy Cavite, Philippines (JV) Sydney, Australia Shanghai, China (JV) Obu, Japan (
Slide 19: Global Economies of Scale
Global Economies of Scale NMHG
Slide 20: Large Global Installed Population
2003 Global Installed Population - 750,000 Lift Trucks* Large installed base provides barrier to entry and assures ongoing parts revenue Estimated 750,000 Hyster(r) and Yale(r) lift trucks in operation worldwide Approximately 75% of total parts for the Hyster(r) and Yale(r) installed base are captur
Slide 21: Dealer Network
Dealer Network Global operations supplying both Hyster(r) and Yale(r) dealer networks Independently owned and operated dealers with exclusivity Either Hyster(r) or Yale(r) Defined sales territories Company-owned dealers Strong global distribution drives market share Leading Dealer/National Accounts
Slide 22: Diversified Customer Base
Diversified Customer Base NMHG markets industrial lift trucks into over 600 different end-user applications in 900 industries Top 10 customers accounted for approximately 10% of 2003 unit sales 2003 Customer Base 2003 Sales by Geography NMHG 49% Customer Mix* * Based on 2001 data
Slide 23: Lift Truck Market Size History
Lift Truck Market Size History NMHG Lift truck market size history - source: ITA, GIVA, FEM 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Europe (2) 91305 116797 133977 101492 105469 127
Slide 24: North American Lift Truck Industry Outlook
North American Lift Truck Industry Outlook Increasing Improvement in Key North American Lift Truck Market Corporate profits improving Industrial production increasing Manufacturing capacity utilization rate improving Employment growing Inflationary pressures likely to be moderating Interest rates ex
Slide 25: Table of Contents
Table of Contents NACCO Industries, Inc. Overview Corporate Oversight and Governance NACCO Materials Handling Group, Inc. (NMHG) NACCO Housewares Group Hamilton Beach^Proctor-Silex, Inc. (HB/PS) The Kitchen Collection, Inc. (KCI) The North American Coal Corporation Investment Considerations Summary
Slide 26: Hamilton Beach/Proctor-Silex, Inc.
A leading designer, manufacturer, importer and marketer of small electric kitchen and household appliances to North America Also commercial products for restaurants, bars and hotels Hamilton Beach^Proctor-Silex, Inc. Hamilton Beach^Proctor-Silex, Inc. Hamilton Beach^Proctor-Silex, Inc. To be the lea
Slide 27: Key Investment Considerations
Key Investment Considerations Innovator with Strong Brand Names Strong Supplier Relationships Low Cost Producer Strong Retailer Relationships Most comprehensive line of small kitchen electric appliances in U.S. with increasing number of market leading innovative new products Brand names include Hami
Slide 28: Leading Brands and Market Shares
Leading Brands and Market Shares Leading Brands and Market Shares Leading Brands and Market Shares Leading Brands and Market Shares Leading Brands and Market Shares #1 market share in U.S. and Canada in small electric kitchen electric and garment care appliances #1 or #2 market share positions in 23
Slide 29: Most Comprehensive Product Line
Most Comprehensive Product Line Automatic Drip Coffee Makers Blenders Can Openers Carafes Coffee Mills Deep Fryers Drink Mixers Electric Knives Espresso/Cappuccino Makers Fifth Burners Food Choppers Food Processors Griddles Hand Blenders Hand Mixers Hot Pots Indoor Grills Ice Cream Makers Ice Shaver
Slide 30: Innovative Products
Innovative Products Innovative Products Innovative Products Innovative Products Hamilton Beach BrewStation(tm) Breakthrough new product One of the top selling coffee makers in 2003 and 2004 in the U.S. Driven significant high-margin growth Hamilton Beach(r) contact grill One of best selling grills i
Slide 31: North American Housewares Industry Outlook
North American Housewares Industry Outlook HB/PS Modest Growth Expected in Key North American Market Niche innovations driving demand and delivering higher margins Consumer sentiment gradually improving Continued strong home sales and housing starts More alliances with consumer packaged goods compan
Slide 32: Table of Contents
Table of Contents NACCO Industries, Inc. Overview Corporate Oversight and Governance NACCO Materials Handling Group, Inc. (NMHG) NACCO Housewares Group Hamilton Beach^Proctor-Silex, Inc. (HB/PS) The Kitchen Collection, Inc. (KCI) The North American Coal Corporation Investment Considerations Summary
Slide 33: The Kitchen Collection, Inc.
The Kitchen Collection, Inc. To be the leading specialty retailer of housewares, including cookware, bakeware, kitchen gadgets and related items, in outlet and traditional malls for consumers seeking outstanding value Vision Overview A national specialty retailer of brand-name kitchenware, small ele
Slide 34: Key Investment Considerations
Key Investment Considerations Consistent Format Disciplined Overhead Management Efficient Supply Chain Leading Brand Names SKU Profitability Optimization Well-tested Kitchen Collection(r) format is leading retailer of kitchenware in outlet malls, with 180 stores (as of December 31, 2003) Gadgets & M
Slide 35: Proven Successful Store Format
Proven Successful Store Format MSPhotoEd.3 MSPhotoEd.3 Kitchen Collection has developed specific approaches over time to improve the three main retail performance drivers: Customer visits, closure rate and average sale KCI continually tests and implements new approaches to further improve these key
Slide 36: U.S. Kitchenware Industry Outlook
U.S. Kitchenware Industry Outlook KCI Modest Growth Expected in U.S. Kitchenware Market High quality imports increasingly available Increasing sales by mass market & specialty channels Growing interest in gourmet cooking Health and diet trends generating demand Continued interest in colors and kitch
Slide 37: Table of Contents
Table of Contents NACCO Industries, Inc. Overview Corporate Oversight and Governance NACCO Materials Handling Group, Inc. (NMHG) NACCO Housewares Group Hamilton Beach^Proctor-Silex, Inc. (HB/PS) The Kitchen Collection, Inc. (KCI) The North American Coal Corporation Investment Considerations Summary
Slide 38: The North American Coal Corporation
The North American Coal Corporation To be the leading low-cost miner of lignite coal used in power generation and coal gasification plants Provide selected value-added mining services for other natural resources companies Vision Overview Largest lignite coal producer in U.S. 8th largest coal produce
Slide 39: Key Investment Considerations
Key Investment Considerations Dependable Financial Performance Minimal Exposure to Coal Prices Coal Gasification Project Potential Future Mining Project Potential Outstanding Mining Skills Steady operating income and cash flow before financing activities High returns on equity Contracts structured t
Slide 40: Coal Production Overview
Coal Production Overview Coal fuels about 50% of the country's electrical generation* Nuclear 20% Natural Gas 18% Hydroelectric 7% Fuel Oil 2% Biomass 2% Other 1% Coal production in the U.S. in 2003 was approximately 1.1 billion tons The country's abundant recoverable coal reserves of over 269 billi
Slide 41: NAC Focuses on Lignite Coal
NAC Focuses on Lignite Coal NAC NAC is the nation's largest miner of lignite coal, delivering 35.5 million tons of lignite in 2003 NAC has 2.4 billion tons of lignite coal reserves, including unconsolidated project mines, of which 1.3 billion tons are committed to current customers Coal Grades
Slide 42: Diverse Mining Locations
THE NORTH AMERICAN COAL CORPORATION Corporate Office Diverse Mining Locations NAC 42
Slide 43: Stable Operating Income Streams
Cost plus profit per ton with incentive agreements Modest up front equity investment by NAC Debt financing guaranteed by utility customer; non-recourse to NAC; no coal market price risk Long-term contracts (2020-2037) 2003 production - 28.1 million tons Fixed price with cost escalator negotiated up
Slide 44: Lignite Coal Mining Industry Outlook
Lignite Coal Mining Industry Outlook Increasing Prospects for Lignite Coal High natural gas prices Consistently low lignite costs and prices Improved emissions control technologies Excellent lignite gasification performance Increasing need for U.S. energy independence High crude oil prices High cost
Slide 45: Table of Contents
Table of Contents NACCO Industries, Inc. Overview Corporate Oversight and Governance NACCO Materials Handling Group, Inc. (NMHG) NACCO Housewares Group Hamilton Beach^Proctor-Silex, Inc. (HB/PS) The Kitchen Collection, Inc. (KCI) The North American Coal Corporation Investment Considerations Summary
Slide 46: Investment Considerations Summary
Investment Considerations Summary Industry-leading businesses Strong cash flow generator Programs underway to enhance profit prospects over next few years Strong brand names Leading market shares Steady, reliable cash generation before financing Cash available for various purposes Objective is to si
Slide 47: Table of Contents
Table of Contents NACCO Industries, Inc. Overview Corporate Oversight and Governance NACCO Materials Handling Group, Inc. (NMHG) NACCO Housewares Group Hamilton Beach^Proctor-Silex, Inc. (HB/PS) The Kitchen Collection, Inc. (KCI) The North American Coal Corporation Investment Considerations Summary
Slide 48: Lift Truck Market Size Data
Lift Truck Market Size Data Lift truck market size history - source: ITA, GIVA, FEM Retail Bookings Factory Shipments
Slide 49: Risks and Uncertainties
Risks and Uncertainties The statements contained in the 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 statements are made subjec
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