Nacco Industries, Inc. · NYSE:NC
Nacco Industries — Investor Presentation (April 2014)
46 slides from Nacco Industries's investor presentation, Apr 10, 2014
Slide 1: Investor Presentation March 2014
Exhibit 99.1 Investor Presentation March 2014
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward Looking Statements Thestatements contained in thispresentation thatarenothistoricalfactsare“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 statemen
Slide 3: Agenda
Agenda 1. NACCO Industries Overview and Strategic Initiatives 2. 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 Initiatives
NACCO Industries Overview and Strategic Initiatives
Slide 5: NACCO Industries at a Glance
NACCO Industries at a Glance NACCO Industries, Inc. (NYSE: NC) Operating holding company with subsidiaries in the mining, small appliances and specialty retail industries Headquartered in Cleveland, Ohio FY 12/31/13 revenue $932.7 – million FY 12/31/13 net income $44.5 – million FY 12/31/13 cash flo
Slide 6: NACCO Industries Overview
NACCO Industries Overview Headquartered in Dallas, Texas Headquartered in Richmond, Virginia Headquartered in Chillicothe, Ohio FY 2013 revenue$193.7 – million FY 2013 revenue$547.8 – million FY 2013 revenue$196.0 – million FY 2013 net income $31.9 - million FY 2013 net income $25.1 - million FY 201
Slide 7: NACCO Industries Overview (continued)
NACCO Industries Overview (continued) NACCO expects to enjoy many benefits from its principal businesses: – Strong collective earnings and cash flow generation capability – Cash flow sustainability and low earnings volatility – Significant management expertise in operating each business across a ran
Slide 8: Experienced Management Team
Experienced Management Team Alfred M. Rankin Jr. Chairman, President and CEO of Chairman, President and NACCO Industries since 1994 Chief Executive Officer ofFormer Vice Chairman, Chief NACCO Operating Officer and Director of Eaton Corporation J.C. Butler, Jr. SVP-Project John Neumann VP, General El
Slide 9: North American Coal Overview
North American Coal Overview
Slide 10: North American Coal ("NACoal") Overview
North American Coal (“NACoal”) Overview Mines and markets steam and metallurgical coal for use in power generation and steel production andprovides selectedvalueaddedminingservicesforothernatural resource companies Open-pit surface mines: North Dakota, Texas, Mississippi, Louisiana and Alabama Uniqu
Slide 11: NACoal Operations
NACoal Operations The Coteau The Falkirk Coyote Creek Mining Properties Company Mining Company Company, LLC (Freedom Mine) NACoal Royalty (Falkirk Mine) (1) (Coyote Creek Mine) Company Reed Corporate Minerals Office Mississippi Lignite Mining Company Camino Real Fuels, (Red Hills Mine) LLC The Sabin
Slide 12: Unconsolidated Mines
Unconsolidated Mines These mines produce strong cash flow with minimal capital requirements Long-term contracts (expiring 2037(1) – 2054)toprovideallfuelrequirements for adjacent power plants or customer facilities Customers pay all costs plus an agreed management fee or profit per ton delivered; pr
Slide 13: Consolidated Mines
Consolidated Mines Consolidated mines provide an opportunity for increased profits where NACoal has capital invested The Red Hills Mine in Mississippi has a long-term fixed price contract (through 2032) to provide fuel to a 440 megawatt power plant supplying the Tennessee Valley Authority system – D
Slide 14: Value-Added Mining Services
Value-Added Mining Services NACoal provides selected value-added mining services for other natural resource companies Fee-based dragline mining services for limerock quarriesFlorida in southern – Customers pay all operating costs plus an agreed management fee per cubic yard of limestone produced – N
Slide 15: NACoal Key Strategy Overview
NACoal Key Strategy Overview Our five strategic initiatives for growth Develop a metallurgical coal business platform – Reed Minerals acquisition was the first step in developing this platform – Strategic efforts are currently underway to improve mining efficiencies at Reed Minerals which are expect
Slide 16: NACoal Operational Highlights
NACoal Operational Highlights Tons of Coal Delivered (1)(2) (millions of tons) 40.0 33.4 33.5 27.9 28.4 29.9 30.0 20.0 10.0 0.0 2009 2010 2011 2012 2013 Cubic Yards of Limerock Delivered (millions of cubic yards) 25.0 22.1 17.9 18.8 20.0 13.7 15.0 10.0 5.0 3.6 0.0 2009 2010 2011 2012 2013 __________
Slide 17: NACoal Financial Highlights
NACoal Financial Highlights Operating Profit Cash Flow Before Financing (2) ($ in millions) ($ in millions) $60 $53.3 $50 $43.9 $32.8 $42.6 $43.2 $21.0 $37.5 $25 $40 $35.2 $0 $20 ($6.1) -$25 ($26.7) $0 -$50 (1) (1) 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Net Income Return on Capital Employ
Slide 18: Hamilton Beach Brands Overview
Hamilton Beach Brands Overview
Slide 19: Hamilton Beach Brands ("HBB") Overview
Hamilton Beach Brands (“HBB”) Overview Leading designer, marketer and distributor of: – Small electric household appliances – Commercial products for restaurants, bars and hotels HBB has a leading retail market share position in North America – In U.S. & Canada, ranked in top 3 share position in ove
Slide 20: Broad Product Offering
Broad Product Offering Comprehensive offering of high-quality consumer housewares Coffeemakers Kettles Toasters Irons SlowCookers Hand Mixers Can Openers Blenders Toaster Ovens 19
Slide 21: HBB Business Highlights
HBB Business Highlights Strong heritage brands with leading market shares Strong relationships with leading retailers and customers across diverse channels Focused emphasis on the quality of our products Successful track record of product line expansion and new product innovation…we call thatGoodThi
Slide 22: Core Business Deliverables
Core Business Deliverables focusedonGoodThinking® Leadwithproductinnovation – Invest in deep understanding of consumer and customer needs – Leverage engineering expertise worldwide to develop innovative solutions that improve everyday living Achieve organizational excellence – ® corecompetency Attra
Slide 23: HBB Strategic Initiatives
HBB Strategic Initiatives The following 5 strategic initiatives have been put in place to achieve a sales goal of $750 million and an operating profit margin target of 10% Enhanceplacements in theNorthAmericanconsumer business – Provide consumer-driven innovative products and strong sales and market
Slide 24: HBB International Opportunity
HBB International Opportunity Goal is to shift international sales mix to 35% to 45% Planned Sales Mix Evolution Illustrative Example International – $190millioninternational sales 35%mix 22% – $245millioninternational sales 45%mix U.S. 78% Actively targeting fast growing China, India, Brazil and ot
Slide 25: Recent Product Launches Support Market Share Gains
Recent Product Launches Support Market Share Gains ® The Flex Brewsingle serve coffee maker launched in early 2013 ® Allows consumer the flexibility to brew single serve coffee using Flex Brew K-Cups®, ground coffee or pods Significant increase in advertising support in 2013 / 2014 ® Durathon solepl
Slide 26: HBB Financial Highlights
HBB Financial Highlights Revenue Operating Profit ($ in millions) ($ in millions) $600 $515.7 $521.6 $547.8 $497.0 $493.0 $80 $400 $50.4 $45.9 $41.0 $40 $33.8 $35.8 $200 $0 $0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Net Income ($ in millions) $30 $26.1 $25.1 $24.4 $25 $21.2 $18.4 $20 $15 $
Slide 27: HBB Financial Highlights (continued)
HBB Financial Highlights (continued) NetWorking Capital(1) CashFlowBeforeFinancing (1) ($ in millions) ($ in millions) Net Working Capital % Revenue $150 30% $60 $95.1 $101.5 $98.3 $96.9 $93.5 $38.5 $100 20% $40 $33.4 $24.2 $20.5 $50 10% $20 $12.8 $0 0% 2009 2010 2011 2012 2013 $0 2009 2010 2011 201
Slide 28: Kitchen Collection Overview
Kitchen Collection Overview
Slide 29: Kitchen Collection ("KC") Overview
Kitchen Collection (“KC”) Overview National specialty retailer of kitchenware and gourmet foods ® – Operates under the Kitchen Collection and Le ® Gourmet Chefstore names – Located in outlet and traditional malls throughout the U.S. Outlet mall niche focus differentiates Kitchen Collection – Challen
Slide 30: KC Business Highlights
KC Business Highlights Strategic plan in place led by experienced management team – Focus on core outlet segment – Close under-performing stores – Realign cost structure for decreases in store footprint – Improve store merchandising – Expand partnerships with suppliers One core store format with a c
Slide 31: KC Key Strategy Overview
KC Key Strategy Overview Focus: All your kitchen needs…for less Build on solid core stores, increase comparable store sales and close underperforming stores Focus on outlets and selectively expand in strong outlet malls in well- positioned locations Focus: Cook, eat, entertain Phase out high rent st
Slide 32: KC Operational Highlights
KC Operational Highlights Store Count 400 337 296 300 312 304 300 200 100 0 2009 2010 2011 2012 2013 Sales Per Store ($ in thousands) $1,000 $722.6 $732.0 $720.2 $750 $656.4 $644.7 $500 $250 $0 2009 2010 2011 2012 2013 31
Slide 33: KC Financial Highlights
KC Financial Highlights Revenue Operating Profit (Loss) ($ in millions) ($ in millions) $300 $9 $6.7 $5.9 $213.9 $219.6 $221.2 $224.7 $196.0 $2.5 $3 $200 ($3) $100 ($9) ($4.5) ($15) ($10.9) $0 2009 2010 2011 2012 (1) 2013 (1) 2009 2010 2011 2012 2013 Cash Flow Before Financing (2) Net Income (Loss)
Slide 34: NACCO Industries Financial Update
NACCO Industries Financial Update
Slide 35: Q4 2013 Highlights and Outlook
Q4 2013 Highlights and Outlook Q4 2013 Results ($ in millions) NACoal experienced a year-over-year decline in net income due to 2013 Fourth Quarter 2013 Full Year a substantial loss at Reed Minerals, which included a goodwill $ % $ % impairment pre-tax charge of $4.0 million and lower royalty & othe
Slide 36: Why Invest in NACCO?
Why Invest in NACCO? NACCO represents a strong, multi-industry company with leading, well-positioned businesses in mining, small appliances and specialty retail North American Coal has a unique lignite coal businessamodel key expansion and initiative into the metallurgical coal market: – Provides mi
Slide 37: Appendix
———e Hamilton Beach rete Appendix
Slide 38: Risk Factors
Risk Factors The risks and uncertainties with respect to each subsidiary’s operations as referenced on page 1 of this document include, without limitation: North American Coal: (1) the successful integration of the Reed Minerals acquisition, (2) changes in the demand for and market prices of metallu
Slide 39: Non-GAAP Disclosure
Non-GAAP Disclosure AdjustedEBITDA, netdebt,cashflowbeforefinancing activities, returnoncapitalemployed andnetworkingcapitalarenot measurementsunderU.S.GAAP,shouldnotbeconsidered inisolation orasa substitute forGAAPmeasures, andarenot necessarily comparable with similarly titled measures of other co
Slide 40: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted EBITDA reconciliation ($ in millions) Calculation of Adjusted EBITDA 2013 Fourth Quarter 2013 Full Year Net income $22.6 $44.5 Goodwill impairment charge 4.0 4.0 Income tax provision 4.6 11.3 Interest expense 1.2 4.8 Interest income (0.1) (0.3) Depreciation, depletio
Slide 41: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) Adjusted EBITDA reconciliation – by segment ($ in millions) 2013 Full Year North American Hamilton Beach Kitchen NACCO & Coal Brands Collection Other Calculation of Adjusted EBITDA Net income (loss) $31.9 $25.1 $(6.9) $(5.6) Goodwill impairment charge 4.0 - - - In
Slide 42: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) Net Working Capital Hamilton – Beach Brands ($ in millions) December 31, 2009 2010 2011 2012 2013 Accounts receivable, net $79.2 $87.6 $83.7 $94.9 $100.7 Inventories, net 67.0 84.7 75.6 84.8 90.7 Less: Accounts payable (51.1) (70.8) (61.0) (82.8) (97.9) Net Workin
Slide 43: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) Cash Flow Before Financing ($ in millions) North American Coal For the Fiscal Year Ended December 31, 2009 2010 2011 2012 2013 Net cash provided by operating activities from continuing operations $50.4 $25.9 $31.7 $50.2 $29.5 Net cash provided by (used for) invest
Slide 44: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) Return on Capital Employed – 2009 & 2010 North AmericanHamilton Beach ($ in millions) Coal Brands 2009 2009 Average Equity (12/31/2008 and each of 2009’s quarter ends) $102.0 ($29.3) Plus: 2009 Average Debt (12/31/2008 and each of 2009’s quarter ends) 85.5 117.3 L
Slide 45: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) North American Hamilton Beach Return on Capital Employed 2011 – and 2012 Coal Brands ($ in millions) 2011 2011 Average Equity (12/31/2010 and each of 2011’s quarter ends) $133.8 $22.3 Plus: 2011 Average Debt (12/31/2010 and each of 2011’s quarter ends) 51.9 90.6 L
Slide 46: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) Return on Capital Employed 2013 – ($ in millions) North American Hamilton Beach Coal Brands 2013 2013AverageEquity(12/31/2012 andeachof2013’squarterends) $121.2 $48.8 Plus:2013AverageDebt(12/31/2012 andeachof2013’squarterends) 140.3 27.2 Less:2013AverageCash(12/31
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