Hyster-Yale Materials Handling, Inc. — 2021 Form 10-K
Business context and period: Annual report for the fiscal year ended December 31, 2021. The company designs, manufactures, sells and services lift trucks and related products, principally under the Hyster and Yale brands. Its businesses also include Bolzoni attachments and Nuvera hydrogen fuel-cell products.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $3,075.7 million | $2,812.1 million |
| Gross profit / margin | $363.4 million / 11.8% | $465.4 million / 16.6% |
| Operating income (loss) / margin | ($152.3) million / (5.0)% | $49.9 million / 1.8% |
| Net income (loss) attributable to stockholders | ($173.0) million | $37.1 million |
| Diluted earnings (loss) per share | ($10.29) | $2.21 |
| Cash from operating activities | ($253.5) million | $166.9 million |
| Capital expenditures | $44.3 million | $51.7 million |
| Cash and cash equivalents at year-end | $65.5 million | $151.4 million |
| Total debt, including finance leases | $518.5 million | $289.2 million |
Year-end inventory rose to $781.0 million from $509.4 million, largely as supply constraints left the company holding components while awaiting critical parts needed to complete trucks. Total equity declined to $382.9 million from $651.1 million; debt to total capitalization increased to 58% from 31%.
- Revenue increased 9.4%, reflecting higher lift-truck and parts volumes, Bolzoni growth and favorable currency translation. Lift-truck shipments rose 11% to 94,900 units.
- Operating results deteriorated amid material and freight inflation, component shortages, production inefficiencies and the reinstatement of pre-pandemic salaries and benefits. Management estimated supply-chain and logistics cost inflation reduced gross profit by $125.1 million.
- Operating cash use reflected a $289.7 million inventory outflow and a $54.6 million accounts-receivable outflow, partly offset by increased payables and other liabilities.
- Year-end lift-truck backlog reached 105,300 units, with an approximate sales value of $2.88 billion, versus 40,600 units and $1.07 billion a year earlier. Substantially all was expected to ship within twelve months, though orders may generally be canceled subject to stated conditions.
Material changes, unusual items and risks
- The company recorded a $55.6 million fourth-quarter goodwill impairment for JAPIC, eliminating that segment’s goodwill, and a $10.0 million impairment of Nuvera fixed assets. Nuvera also recorded a $16.1 million inventory write-down.
- A $58.6 million valuation allowance against deferred tax assets contributed to a $28.3 million income-tax provision despite a pretax loss. The reported effective tax rate was (18.3)%; the allowance is an accounting charge and does not itself use cash.
- Brazilian tax-credit matters produced approximately $8.5 million of income recognized in 2021; the company also sold credits at a discount. The sale of OneH2 preferred shares generated $15.7 million of proceeds and a $4.6 million gain.
- Liquidity included a $300 million revolving facility, with $155.0 million drawn and $140.1 million reported available under that facility; additional non-U.S. revolving availability was $24.9 million. The company reported compliance with facility and term-loan covenants at year-end. Debt is largely floating-rate and secured; the term loan matures in May 2028 and the revolving facility in June 2026.
- Customer and dealer financing exposures include $106.8 million of recourse or repurchase obligations. Separately, the company disclosed total guarantee exposure of $293.0 million, including a $197.3 million incremental obligation associated with its guarantee of HYG Financial Services’ debt. The filing cites collateral and does not identify a significant expected loss, but actual exposure could differ.
- Key risks include continuing supply-chain and component constraints, inflation and freight costs, tariffs, pricing delays against backlog costs, cyclical demand, foreign-exchange and interest-rate movements, COVID-related disruption, and the commercial viability of Nuvera fuel-cell technology. Environmental, product-liability and other ordinary-course claims are also possible; the company reported no material legal proceeding and said recorded contingencies were not expected to be materially exceeded.
Outlook and management commentary
For 2022, management expected a large first-quarter net loss, a substantially smaller but still large second-quarter loss, approximately breakeven third-quarter results and substantial fourth-quarter net income, with the full-year outcome not expected to recoup first-nine-month losses. These expectations depended on component shortages easing and material and freight costs stabilizing. Management projected higher full-year lift-truck shipments on backlog, but lower bookings than in 2021; margins were expected to improve as price increases reached shipments. Bolzoni expected improved profitability, while Nuvera was expected to continue generating losses, albeit moderately reduced excluding 2021 charges. Planned 2022 capital expenditures were approximately $31.5 million, and management emphasized protecting liquidity.
These are forward-looking expectations, not guarantees. The filing highlights uncertainty around supply normalization, customer acceptance of pricing, inflation, demand, further impairments or tax valuation allowances, and the timing and success of strategic initiatives.
Important facts for investors to verify
- Whether component availability, freight costs and price realization improved as assumed, and whether backlog converted to shipments without cancellations or further margin pressure.
- Whether operating cash flow and inventory levels recovered, and how borrowing, liquidity headroom and covenant compliance changed after year-end.
- The sustainability of the large 2021 deferred-tax valuation allowance and the cash-tax effects beginning in 2022 from required R&D-cost amortization.
- Potential losses and collateral recovery under dealer/customer recourse obligations and the HYGFS debt guarantee.
- Nuvera’s commercialization progress, cash requirements and further impairment risk, alongside performance and outlook for JAPIC and Bolzoni.