Business context and reporting period
Hyster-Yale Materials Handling, Inc. designs, manufactures and services lift trucks and related products, primarily under the Hyster and Yale brands. Its businesses include the Americas, EMEA and JAPIC lift-truck regions, Bolzoni attachments, and Nuvera hydrogen fuel-cell products. This Form 10-K reports the fiscal year ended December 31, 2022; figures below are annual, not standalone fourth-quarter results. Amounts are in U.S. dollars.
Financial performance and position
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $3,548.3 million | $3,075.7 million |
| Gross profit / margin | $433.9 million / 12.2% | $363.4 million / 11.8% |
| Operating loss / margin | $39.1 million / (1.1%) | $152.3 million / (5.0%) |
| Net loss attributable to stockholders | $74.1 million; diluted loss per share $4.38 | $173.0 million; diluted loss per share $10.29 |
| Cash from operating activities | $40.6 million | Cash used of $253.5 million |
| Capital expenditures | $28.8 million | $44.3 million |
| Cash and cash equivalents at year-end | $59.0 million | $65.5 million |
| Total debt, including finance leases | $552.9 million | $518.5 million |
Revenue increased 15.4%, driven mainly by higher pricing, lift-truck and parts volume, and product mix, partly offset by unfavorable foreign-currency translation. Lift-truck shipments rose 6.2% to 100,800 units. Gross margin improved modestly, but the company remained loss-making. Interest expense increased to $28.4 million from $15.5 million.
Cash from operations improved substantially, primarily with a smaller inventory cash outflow than in 2021. Inventories were $799.5 million at year-end, up from $781.0 million; accounts receivable rose to $523.6 million from $457.4 million. Working capital and inventory reduction remained management priorities. The current ratio was approximately 1.09, calculated from reported current assets and liabilities.
At year-end, the company had $157.7 million of availability under its principal revolving facility and $25.2 million under other non-U.S. revolving lines. It reported compliance with debt covenants and said available cash, credit facilities and operating cash flow should meet needs for the next 12 months. Debt-to-total-capitalization rose to 71% from 58%.
Material changes and segment results
- Americas revenue increased 21.2% to $2,405.4 million and the segment moved from a $19.7 million operating loss to $46.8 million operating profit, chiefly on pricing and volume.
- EMEA revenue rose 3.7% to $704.2 million, but operating results shifted from $0.3 million profit to a $46.6 million loss. Material-cost inflation, production inefficiencies and currency effects outweighed pricing and volume gains.
- JAPIC reported a $10.6 million operating loss versus $67.5 million in 2021. The improvement primarily reflects the absence of the prior-year $55.6 million goodwill impairment charge.
- Bolzoni reported $6.2 million operating profit versus a $1.8 million loss, while Nuvera’s operating loss narrowed to $34.3 million from $62.3 million. Nuvera revenue remained small at $3.4 million.
- Gross profit benefited from $300.5 million of favorable lift-truck pricing and improved volume, but was substantially offset by $257.3 million of material-cost inflation and higher manufacturing costs, plus $43.3 million of unfavorable currency effects, including derivatives.
Outlook, risks and contingencies
Management expected the global lift-truck market to decline in 2023 versus 2022 in most regions, with a modest increase anticipated in JAPIC. It expected 2023 production and shipments to rise, backlog and lead times to ease, and margins to improve as higher-margin backlog ships and cost inflation moderates. Management forecast substantial 2023 operating profit and net income on a consolidated basis, and significant revenue and operating-profit growth in the lift-truck business. These expectations depend on supply-chain improvements, production increases, pricing and cost stabilization; they are forward-looking statements, not guarantees.
Lift-truck backlog was 102,100 units valued at approximately $3.73 billion at December 31, 2022, with substantially all expected to ship within 12 months. Orders may generally be canceled before sale, subject to stated conditions. Management planned approximately $65 million of 2023 capital expenditures and expected significantly higher cash flow before financing activities than in 2022.
- Key operating risks include critical-component shortages, commodity and labor inflation, tariffs, supply-chain disruption, foreign exchange and interest-rate movements, cyclical demand, and dependence on independent dealers.
- Nuvera faces commercialization, execution and competing-technology risks. The company expected Nuvera’s 2023 loss to be comparable to 2022 despite higher sales and costs.
- Guarantees and recourse or repurchase obligations are material: total exposure related to guarantees was reported as $330.8 million, including $133.2 million of recourse or repurchase obligations. Management said anticipated losses were not significant and collateral generally supports the obligations; actual losses could differ.
- Other notable items include $121.7 million of valuation allowances against deferred tax assets and a $27.5 million 2022 tax expense from valuation-allowance changes. The 2021 comparison included a $55.6 million JAPIC goodwill impairment and $10.0 million Nuvera fixed-asset impairment, as well as Nuvera inventory charges.
- The company disclosed ordinary-course legal and environmental claims but no material legal proceeding; it said historical-site contamination could create future costs. It reported effective disclosure controls and internal control over financial reporting, with an unqualified auditor opinion.
Important facts for investors to verify
- Whether 2023 shipment growth, backlog conversion and pricing deliver the expected margin recovery, particularly in EMEA.
- Whether component availability and inflation improve as assumed, and whether inventory reductions translate into cash generation.
- Liquidity, debt maturities, borrowing availability, covenant headroom and the effect of higher floating interest rates.
- Potential cash or earnings impact of customer-financing guarantees, recourse obligations and the HYGFS guarantee to Wells Fargo.
- Nuvera’s customer adoption, revenue growth, cash requirements and progress toward commercializing fuel-cell technology.
- Recoverability of deferred tax assets, the level of valuation allowances, and sensitivity of Bolzoni goodwill to forecasts and valuation assumptions.