mass customization 2019 baml leveraged finance … · ice = internal combustion engine total...

MassCustomization

Electrification

Automation

Globalization

Digitization

2019 BAML LEVERAGED

FINANCE CONFERENCETUESDAY, DECEMBER 3

Brian FrentzkoVice President, Treasurer

Safe Harbor Statement & Disclosure

2Transforming the Future

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 Hyster-Yale’s reports filed on Forms 8-K (current), 10-Q (quarterly), and 10-K (annual) for information on factors that could cause actual results to differ materially from information in this presentation and for information reconciling financial measures to GAAP. Past performance may not be representative of future results.

Forward-looking Information noted in the following slides was effective as of the Company’s most recent Investor Day (November 19, 2019). Nothing in this presentation should be construed as reaffirming or disaffirming the outlook provided as of that date.

This presentation is not an offer to sell or a solicitation of offers to buy any of Hyster-Yale’s securities.

Our Businesses

3

Ou

r Attach

men

t Bu

siness

Ou

r Fue

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usin

ess

Transforming the Future

Ou

r Co

re Lift Truck B

usin

ess

Slide 3 in print out

4

Reach Trucks

Counterbalance

4-wheelDiesel Forklift

Port MachineryICEWarehouse EquipmentElectric

Forklifts

Internal Combustion

Engine

Lithium-Ion

Reach Stackers

Big

Trucks

Very Narrow Aisle Trucks

Full Lift Truck Product Line - Over 400 Different Truck Models AvailableElectric Counterbalanced

Rider Trucks

Electric Narrow

Aisle TrucksElectric Hand Trucks

ICE

(cushion tire)

Internal Combustion Engine (ICE)

(pneumatic tire)

3-wheel Electric

4-wheel Electric

Pallet Trucks

Stackers

Order Pickers

Empty / Laden

CLASS 1 CLASS 2 CLASS 3 CLASS 4 CLASS 5

1.0T to 8.0T 1.5T to 6.0T 1.5T to 8.0T 1.0T to 7.0T 1.0T to 52.0T

Electric

CB

Container Handlers

Internal Combustion Engine

1.5T to 5.0T 1.0T to 2.0T 1.0T to 2.0T 1.5T to 45.0T

CLASS 1 CLASS 2 CLASS 3 CLASS 5

Empty Container Handler

Reach Stacker

Rough Terrain Forklift

Very Narrow Aisle Truck

3-wheel Side

LoaderReach Truck

Hys

ter®

, Ya

le®

& U

TILE

V®

~ 3

00

mo

del

sH

Y M

axim

al >

100

mo

del

s

Stacker

Pallet Truck

Gas & LPG Forklift

OTHER

Warehouse

Equipment

Transforming the Future Slide 5 in print out

5

…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)

CLASS 1, 2 & 3

Fuel Cell Engine

LPG & Bi-fuel

Diesel Tier 3 / Stage III

LPG & CNG Diesel Tier 4 / Stage IV/

Tier 5 - coming

Lithium-ion Battery

CLASS 4 & 5 ClampsMultipallets

Rotators

SideshiftersFork

Positioners

Forks

47,000+ assetsunder management

Power Options Attachments

Lead-Acid

Battery

Solutions


6

Class 1Electric

21%Class 2Electric

12%

Class 3Electric

11%

Class 4 ICE4%

Class 5 ICE52%

Class 1 Electric

17%

Class 2 Electric

9%Class 3 Electric

38%

Class 4 ICE2%

Class 5 ICE34%

872 547 794 975 944 1,010 1,094 1,100 1,182 1,395 1,538 1,4880

300

600

900

1,200

1,500

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM2019

Long-term CAGR (2004 – 2018) = 5.7%

_____________________

Source: ITA. Represents quarterly order intake.

Global Lift Truck Industry Remains Strong, but Moderating

(units in thousands)

Global Lift Truck Industry Size

_____________________

Trend line represents 5.7% long-term CAGR Average Industry Size. Source: WITS. Represents annual order intake.

North America Retail Lift Truck at Trend Line_____________________

Source: WITS. LTM 12/31/15 Orders Reports.Lift Truck Industry – Unit Distribution by Class

_____________________

Source: WITS. LTM 9/30/19 Orders Reports.

ICE = Internal Combustion Engine

Total Industry = 1,488k Units

Market Size - $_____________________

Source: Internal Company estimates

Market Size - Units

Estimated Industry Revenue Mix

_____________________

Source: WITS. LTM 9/30/19 Orders Reports.

Global Lift Truck Industry Breakdown (Units)

Trend Upper Limit Lower Limit NA

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Q1

72

Q1

74

Q1

76

Q1

78

Q1

80

Q1

82

Q1

84

Q1

86

Q1

88

Q1

90

Q1

92

Q1

94

Q1

96

Q1

98

Q1

00

Q1

02

Q1

04

Q1

06

Q1

08

Q1

10

Q1

12

Q1

14

Q1

16

Q1

18

6

Europe33%

Americas21%

China30%

Japan6%

Asia-Pacific7%

Middle East & Africa

3%


Transforming the Future 7

Significant Market Opportunities for Value-Add Solutions

Solid Core Market Increasing Value Add Technology AcceleratorsClear secular growth drivers

Increasing margins & differentiation

Increasing scope for differentiation & share gain

Rise of e-commerce

Increasing global trade

Diminished excess labor in high growth markets

Customer economics

Operator demographics

Electrification & Automation

Digital transformation

IoT

Automation solutions


Lift Truck Profitability Trend – Impacted by Tariffs, but Improving

8

$57.5

$110.1

$67.5 $72.1 $67.9

2.1%

4.0%

2.3% 2.3%

2.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

$0

$25

$50

$75

$100

$125

2007* 2017 2018** LTM 9/30/19 YTD 9/30/19

($ in millions) 7% LIFT TRUCK OPERATING PROFIT MARGIN TARGET

* Prior Peak ** Current Peak / 2018 Operating Profit Margin impacted by effect of tariffs


Lift Truck Business Target Economics Goal and Gap to Target

9

Achieve 7% operating profit margin target over the medium term

Achieve ROTCE > 20%

YTD 9/30/19 Gap to Target Economics

Actual Lift Truck Operating Profit Margin % 2.9%

Margin Variances – including impact of Tariffs 2.0%

Volume Variances*

Manufacturing variances/other 1.2%

Operating Expenses 0.9%

Total Volume Variances* 2.1%

Lift Truck Operating Profit Margin % Gap 4.1%

Lift Truck Operating Profit Margin % Target 7.0%

Impacts on current results • Price lag to offset material inflation and tariffs• Supplier challenges impacting shipments• Investment in strategic projects• Strength of dollar


Target Economics gap closure can be achieved

with unit volume…Stronger Industry

+ Share Growth = Volume Leverage

*Expected to achieve with annual sales of 122,000 HY-produced lift truck units (mix dependent), excluding trucks manufactured by Hyster-Yale Maximal


10

Core Lift Truck Synergy Amplification


Synergy

Provide Lowest Cost of Ownership, while

Enhancing Productivity for

Customers

Be the Leader in the Delivery of Industry-& Customer-Focused

Solutions

Be the Leader in Independent Distribution

Grow in Emerging Markets

China Sourcing

Distribution Engagement

Automation

Telematics

IoT

DigitizationDirect Customer Engagement

Modularity & Mass Customization

Electrification

Operator Assist Systems

E-commerce


Cylinders & Transmissions*

42%Attachments

43%

Lift table3%

Other revenue3%

Forks 9%

Bolzoni at a Glance

11

_____________________

Notes:

(1) Excludes $2.5 million of restructuring charges.

(2) EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for GAAP measures. See non-GAAP explanations and the related reconciliations to GAAP measures on the Company’s website..

LTM 9/30/19 Sales by Segment

$6.4 $9.5 $6.1 $4.2 $6.7

2.0%2.7%

1.8% 1.6%

2.6%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

$0

$2

$4

$6

$8

$10

2017 2018 LTM Q32019

YTD Q32019

Adj. YTD Q32019

($ in millions)7% BOLZONI OPERATING PROFIT MARGIN TARGET

Bolzoni is one of the worldwide leading manufacturers of lift attachments,

forks and lift tables, with the most extensive product range in the market

Transforming the Future 11

Key Metrics YTD 9/30/19In millions (except employee data)

Bolzoni Group

Revenue $258.4

Operating Profit $4.2

Operating Profit excluding Restructuring(1) $6.7

Net Income $2.6

EBITDA(2) $13.2

Net Debt at end of period $12.4

Approximate # of Employees (globally) 1,300

2018 Customer Mix

43%57%

Lift Truck Manufacturers – OEM

Lift Truck & Material Handling Dealers

(1)

* LTM Q3 2019 includes cylinders

and transmissions produced in the

Sulligent, Alabama plant



Sulligent location converted to Bolzoni facility - more than tripling U.S. production capacity

Bolzoni – Sulligent LocationAn Investment in Growth

Bolzoni’s Sulligent location is a ready-to-go facility offering space, capability, leadership and experience – investments made to move Bolzoni production from Homewood, Illinois to Sulligent, Alabama:

$2.5M $0.8M to $1.5MSeverance, plant rearrangement and moving expenses

Investments to complete transition

Q4 2019 / FY 2020YTD 2019

On-shoring production

Improved IT systems

Increased volumes and products

New access for cylinders and other components

Team stability

Improved internal sales support with technical and engineering expertise

Expanded service team


North American Expansion

Industry Focus

Enhance OEM

Business

Far East Expansion

AGV Market

Presence Expansion

Fork Business Growth

13

Bolzoni Core Strategies for Growth


Nuvera at a Glance

14

Technology History• 75+ engineers• 8th generation of Fuel

Cell concept• 20 years of Fuel Cell

demo vehicles

Application Portfolio• Electric mobility• Highly diverse

applications• High efficiency Fuel

Cell engine

Intellectual Property• 650+ live patents• Fuel Cell core tech• Next Generation

Separate Business Unit• Focus on core

product (Fuel Cells)• Leveraging Hyster-

Yale strengths• Ramping up for

growth


Strong Demand Growth for Fuel Cells

15

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2019 2020 2021 2022 2023 2024 2025

Global Estimates Units/Revenue (US Million)

Annual Units Annual Revenue

• Global mobility market is large and expected to grow fast

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

-

20,000

40,000

60,000

80,000

100,000

120,000

2019 2020 2021 2022 2023 2024 2025

Regional Estimates Units/Revenue (USD Million)

North America Europe Asia Pacific

NA Rev Europe rev Asia Rev

• Three main regions for growth• Other regions have activity but small volume

Source: FCEV Market Report 2025, GMI Inc. 2019.


16

Non-Lift Truck Growth Opportunities

Heavy duty applicationsPort equipment Delivery vehicles Buses

Partnering with ZRHE (Runfeng) Nuvera 45kW Fuel Cell engines certified for

China; vehicle testing in progress

Discussions with various bus OEMs

Building engine production capacity


17

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.

Hyster-Yale at a Glance

_____________________

Note: Throughout this investor presentation the results of the Sulligent, Alabama, facility have been included in the Bolzoni segment from 1/1/2017. From 1/1/18, the results of Nuvera include product development funding from third-parties as revenue with the offsetting related costs in cost of sales.

(1) EBITDA and ROTCE are non-GAAP measures and should not be considered in isolation or as a substitute for GAAP measures. See non-GAAP explanations and the related reconciliations to GAAP measures on the Company’s website.

Lift Truck Bolzoni Nuvera

Revenue $3,120.2 $345.5 $22.8

Operating Profit (loss) $72.1 $6.1 ($35.7)

Net Income (loss) $55.7 $3.0 ($25.2)

EBITDA(1) $120.0 $17.0 ($33.8)

ROTCE(1) (Net debt basis) 11.5% 2.2% n/m

Net Debt at end of period $276.2 $12.4 n/m

Approximate # of Employees (globally) 6,300 1,300 200


Key Metrics In millions (except employee data)LTM 9/30/2019

LTM 9/30/19Sales by Segment

Americas63.5%

EMEA23.1%

JAPIC8.0%

Bolzoni5.1%

Nuvera0.3%


2.4% 1.4% 1.6%-0.4%

0.4% 2.7% 2.5%

18

Significant 2018 and 2019 Trends


$788.5 $765.9 $783.9 $840.8 $834.8 $856.2 $766.0

$19.2 $10.8 $12.2

$3.4

$22.9 $19.5

$0

$5

$10

$15

$20

$25

$0

$200

$400

$600

$800

$1,000

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 2020

Revenue

OperatingProfit

($3.4)

Steel Tariffs/Prices

China Tariffs

BT Supplier

Constraints

Price

Volume

CB Supplier Constraints

Program Spend

Revenue in millions Revenue and Operating Profit

Operating Profit Margin %

Operating Profit in millions


Return Cash to Stockholders

Investments in Share Gain Programs

Investments in Adjacent or Complementary Businesses

Investments in Fuel Cell Business

Investments in Lift Truck & Attachments

Businesses

Hyster-Yale Use of Cash Priorities

Expense and Capital Investments in strategic initiatives to accelerate

growth or enhance margins

Investments to commercialize Nuvera’s fuel cell technology

Acquisitions of technologies and other forklift-related businesses

2017 2018 2019

Annual Dividends (1)

$19.8m $1.21/share

$20.4m $1.24/share

YTD $15.7m $1.27/share

2012 to 2014

Share Buyback

$49.8m / 694,653 shares of Class A common stock

Strong continuing dividend

support and growth


(1) Dollars represent total dividends paid during calendar year, while dividend per share represents the annualized dividend rate after each May increase in 2017, 2018 and 2019.


Key Capital Expenditures and R&D

20

0

10

20

30

40

50

60

2015 2016 2017 2018 Est.2019*

Bolzoni

Nuvera

New Brazil Plant

SAP & CRM/CPQ

Core ForkliftInvestments

Capital expenditures and R&D directed to support key HY lift truck product initiatives along with development of Bolzoni and Nuvera products and facilities

(to

tal $

in m

illio

ns)

* Estimated

0

20

40

60

80

100

120

140

2015 2016 2017 2018 Est.2019*

Bolzoni

Nuvera

Core Forklift

Capex R&D

Transforming the Future(t

ota

l $ in

mill

ion

s)Slide 52 in print out

Risk Assessment Needs to Vary By Business

21

Lift Truck and Attachment Businesses Fuel Cell Business

Board Oversight as Separate BusinessesIncentives Tied to Individual Businesses

Strong Operating Cash Generation

Market Leading Products and Position

Mature Cyclical Industry

Value using Traditional Valuation Model of EBITDA Multiple on a Net Debt BasisMultiple should reflect ROIC levels and growth prospects

Developing / Technology Industry

Distinct Technology / Patents in Fuel Cell and Hydrogen Generation

Operating Cash Invested in New Product Commercialization / Ramp Up

Value as Venture Business with Developed Technology


An Objective of Significant Profitability Enhancement

22

HYSTER-YALE

Solid Balance Sheet

Commitment to Shareholder Return over the Long Term

Leading Products & Market Position

Strategies to Gain Share in all Segments & Markets

Solid Return on Capital

Investment & Growth in Game Changing Technologies

Customer Focused & Solutions Oriented



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mass customization 2019 baml leveraged finance … · ice = internal combustion engine total...

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