Hyster-Yale Materials Handling, Inc. — FY2023 Form 10-K
Reporting period: Year ended December 31, 2023. This is an annual report; the supplied filing text does not provide a standalone fourth-quarter income statement.
Business context
The company designs, manufactures and services Hyster- and Yale-branded lift trucks, aftermarket parts and related solutions. Its businesses include the Americas, EMEA and JAPIC lift-truck segments, Bolzoni attachments and Nuvera hydrogen fuel-cell products. Lift trucks and parts are sold mainly through independent dealers.
Financial performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $4,118.3 million | $3,548.3 million |
| Gross profit / margin | $785.6 million / 19.1% | $433.9 million / 12.2% |
| Operating profit (loss) / margin | $208.7 million / 5.1% | $(39.1) million / (1.1)% |
| Income (loss) before taxes | $181.0 million | $(62.4) million |
| Net income (loss) attributable to stockholders | $125.9 million | $(74.1) million |
| Diluted earnings (loss) per share | $7.24 | $(4.38) |
| Cash from operating activities | $150.7 million | $40.6 million |
| Capital expenditures | $35.4 million | $28.8 million |
| Cash and cash equivalents at year-end | $78.8 million | $59.0 million |
| Total debt, including finance leases | $494.0 million | $552.9 million |
Revenue grew 16.1%, led by higher pricing, stronger Americas unit and parts volume, and mix toward higher-priced trucks. Lift-truck shipments rose 1.4% to 102,200 units; shipments declined in EMEA and JAPIC while increasing in the Americas. Gross profit improved substantially on pricing, lower material costs net of manufacturing inefficiencies, favorable product mix and higher sales. These gains were partly offset by increased employee, marketing, product liability and product-development expenses. Interest expense rose to $37.3 million from $28.4 million; the reported effective tax rate was 29.2%.
Americas operating profit was $233.1 million, EMEA $12.1 million and JAPIC recorded a $15.6 million operating loss. Bolzoni earned $15.3 million in operating profit; Nuvera recorded a $36.4 million operating loss.
Liquidity, debt and obligations
- Operating cash flow increased year over year, but cash flow before financing activities was $116.2 million. Working-capital movements included cash use from lower accounts payable and reduced customer deposits.
- Year-end total debt was $494.0 million; revolving credit agreements had $83.3 million outstanding. The company reported $236.0 million of availability under its main facility and $33.7 million under other non-U.S. revolving lines. It was in compliance with facility and term-loan covenants at year-end.
- The secured revolving facility expires in June 2026; the $225 million term loan matures in May 2028. Weighted-average effective interest on total borrowings, including swaps, was 6.8%, versus 5.9% in 2022.
- Maximum undiscounted recourse and repurchase obligations were $162.4 million, up from $133.2 million. The company reported collateral with estimated fair value of approximately $217.8 million and said expected losses were not significant.
- Management expects cash on hand, available credit and operating cash flows to cover operating needs and commitments for the next 12 months. Planned 2024 capital expenditures are $87 million, compared with $35.4 million in 2023.
Material changes and outlook
- Lift-truck backlog declined to 78,400 units, with an approximate sales value of $3.33 billion, from 102,100 units and $3.73 billion at year-end 2022. Substantially all year-end backlog was expected to ship within 12 months; orders may generally be canceled before sale.
- Management expects global lift-truck market bookings in 2024 to be broadly comparable to 2023, with a weaker first half and stronger second half. It expects company bookings, production and shipments to increase year over year.
- For 2024, management expects higher consolidated operating profit but net income comparable to 2023, citing a higher expected tax rate. Lift Truck revenue and operating profit are expected to rise; full-year gross margins are expected to be comparable to 2023. Pricing competition, tariff-exemption expirations and product mix may temper second-half margins.
- Bolzoni expects modest revenue growth and higher operating profit in 2024. Nuvera expects higher sales offset by development costs, resulting in comparable operating results; commercialization and adoption of its fuel-cell technology remain uncertain.
- Management anticipates significantly higher operating cash flow in 2024, with working-capital reduction a priority. Inventory remained elevated versus pre-pandemic levels, though it was declining from its mid-2023 peak.
Risks, contingencies and unusual items
- Key exposures include cyclicality and weaker demand, supply-chain and critical-component shortages, raw-material and labor costs, tariffs and geopolitical disruption, foreign-exchange and interest-rate volatility, and competition. Management cited Red Sea tensions and tariff-exemption expirations among current uncertainties.
- Product liability, warranty and environmental claims could exceed reserves. The company is generally self-insured for product liability and is investigating or remediating historical contamination at some sites; management did not expect environmental compliance to have a material effect based on current information.
- Deferred tax assets were $145.9 million, reduced by a $126.6 million valuation allowance. The company said U.S. net operating losses were fully utilized in 2023 and that required capitalization of research and development costs increases cash-tax pressure.
- Bolzoni had $50.6 million of goodwill. No goodwill impairment was recorded in 2023, but its valuation was a critical audit matter and depends on forecasts and assumptions. The auditor also identified deferred-tax-asset realizability as a critical audit matter.
- The company reported a $1.3 billion HYG Financial Services loan balance with Wells Fargo and a $263.1 million contractual guarantee; it described an incremental obligation of $236.5 million after excluding receivables already guaranteed. These exposures are distinct from the $162.4 million customer recourse and repurchase obligations.
- Class B shares carry ten votes per share. Certain members of the founding family could exercise approximately 77% of total voting power if acting together, creating concentrated voting control.
Important facts for investors to verify
- Whether 2024 shipment growth, market-share gains and margin assumptions are being achieved as backlog normalizes and pricing becomes more competitive.
- Whether the projected cash-flow improvement and inventory reductions materialize alongside the planned increase in capital spending.
- Debt balances, borrowing availability, interest costs and covenant headroom, including the short-dated $25 million revolving tranche and upcoming debt maturities.
- Actual cash taxes and the outlook for valuation allowances, tax attributes and the expected 2024 tax rate.
- Changes in customer defaults, collateral values and potential losses under financing guarantees and repurchase obligations.
- Progress and economics of Nuvera commercialization, and any developments affecting Bolzoni goodwill or environmental and product-liability reserves.