Hyster-Yale Materials Handling, Inc. (HY) Earnings

Management highlights

### Market Outlook and Quarterly Trends - The first half of 2026 marked the financial low point of the current lift truck market cycle, with Q2 2026 seeing continued gradual recovery. It was the fourth consecutive quarter of bookings growth, with bookings of $680 million, up 17% sequentially and more than double Q2 2025 levels, reaching the highest quarterly booking level in three years. - Key metrics improved sequentially: consolidated revenue was $813 million (up 2% QoQ), operating loss improved to $18 million ($10 million better than Q1 2026), net loss was $32 million (including a $3 million non-cash valuation allowance for Brazilian deferred tax assets), and operating cash flow turned positive at $17 million, a $50 million improvement QoQ driven by working capital discipline. ### Strategic Initiatives - **Modular Value Product Platform Strategy**: The firm's multi-year investment in modular, scalable product platforms is gaining strong customer adoption. The strategy leverages common platforms, components, and manufacturing processes to expand the addressable market, compete across multiple price points, maintain scale efficiency, and support improved margins and manufacturing efficiency. Value products are opening access to customer segments the firm has historically under-served. - **Tariff Mitigation and Supply Chain Resilience**: Tariffs remain an ongoing cost headwind, so the firm is relocating sourcing and production to the U.S. and other lower-tariff regions to build long-term resilient, flexible supply chains and reduce future exposure. - **Cost Restructuring**: The 2025 restructuring program captured half of its expected annualized savings in H1 2026, and is on track to deliver $40 to $45 million in total annualized savings, establishing a lower long-term structural cost base that will drive earnings growth as volumes recover. - **Manufacturing Footprint Optimization**: Optimization projects remain on track, and are expected to begin contributing meaningfully in H2 2027, delivering $15 to $20 million in annualized benefits as volumes rise, reducing break-even points and improving long-term operating efficiency. - **Bolzoni Growth Initiatives**: Bolzoni is progressing on integrating Valmar's mass business, launching new attachments, and expanding camera vision systems to broaden its addressable market and support long-term profitable growth.

Guidance

- The overall view of a gradual market recovery remains unchanged. Customer delivery shifts and production/sourcing transitions for tariff mitigation have moved a portion of expected 2026 recovery to later in the year, with full year 2026 still expected to deliver a moderate operating loss, with the largest performance improvement concentrated in H2 2026 as production and shipment volumes rise. - As production volumes ramp up, higher volumes, pricing actions, manufacturing efficiency gains, and cost reduction initiatives are expected to drive earnings growth in H2 2026, partially offset by ongoing tariff-related costs and competitive pricing pressures. - The firm reaffirms its long-term target of achieving 7% operating profit over the business cycle. It expects trailing 12-month EBITDA to exceed pre-COVID levels in H2 2027, supported by both cyclical demand recovery and structural business improvements including portfolio expansion, cost reduction, modular platforms, and manufacturing optimization. - Production ramp-up is expected to continue through the remainder of 2026, with production expected to reach a steady appropriate rate by Q1 2027, and backlogs expected to flatten out in 2027.

Segment performance

1. Lift Truck Business: The segment drove most of the sequential improvement in consolidated operating results. Higher shipments, favorable pricing, and lower employee-related expenses offset ongoing market challenges. Tariff-related impacts this quarter included $35 million in tariff refunds, offset by unfavorable capitalized material costs and $10 million in higher gross tariff expenses. Revenue for the segment was included in the consolidated total of $813 million, and it contributed the majority of the firm's overall revenue, with sequential improvement in operating performance. 2. Bolzoni: The segment improved sequentially from the first quarter of 2026, returning to profitability. This performance was achieved despite slightly lower revenue, as favorable product mix, lower freight costs, and disciplined cost management more than offset the revenue decline. It continues integrating Valmar's mass business, expanding its product portfolio, and growing long-term profitable opportunities, and it contributes a smaller share of overall consolidated revenue compared to the core lift truck business.

Risks & headwinds

- Tariffs remain a persistent headwind impacting costs and production planning, requiring sudden production location changes that disrupt shipment timing. - Profitability remains under pressure, as current operating volumes are still below optimal levels. - Production ramp-up is dependent on hiring and training new staff and securing sufficient supply chain capacity, and there is a lag between booking growth and shipment realization, with some recovery pushed to later periods. - Customers may shift delivery timelines after booking orders, contributing to uncertainty around revenue recognition timing. - Cyclical demand recovery remains in early stages, with competitive pricing pressures moderating the pace of performance improvement.

Analyst Q&A

• Q: Is the sequential bookings growth trend continuing into Q3 2026, and is it accurate that some expected Q3 2026 revenue has shifted to Q4 2026?

  A: The overall growth trend has continued into Q3, though typical global July-August holiday periods do temporarily dampen quarterly booking volumes. The shift of revenue to Q4 is correct, driven primarily by production location changes in response to 232 tariff changes: production of trucks originally planned for Europe for the North American market was moved to North America to avoid high tariff costs, which delayed delivery timing. Customer-requested delivery shifts are a smaller contributing factor.

• Q: What is the status of production capacity utilization, and what constraints exist for ramping production to match higher bookings?

  A: The firm has sufficient existing plant capacity to meet growing demand. The primary constraints are hiring and training new plant staff, and coordinating lead times with supply chain partners to ramp up component supply. The firm is taking a disciplined approach to ramp-up, applying lessons learned during the COVID-19 pandemic to avoid production disruptions from part shortages.

• Q: How does unit bookings growth compare to dollar bookings growth, and has the modular value product strategy changed the unit mix?

  A: Volume growth is broadly even across all product lines, but there is a noticeable shift toward simpler standard and value trucks, which aligns with the firm's expanded portfolio strategy. These value products are well-suited for low-utilization applications like retail big box stores that the firm historically served with over-specified premium trucks, and customer adoption has been strong due to appropriate pricing and fit-for-purpose design.

• Q: What progress has been made on the parts and aftermarket growth strategy?

  A: The initiative is still in early stages, with examples including newly developed application-specific tire solutions: for low-utilization retail trucks that see little usage, lower-cost tires that wear out at the same time they chemically age out are a better customer solution than premium long-wear tires. The firm is also offering remanufactured axles and transmissions for discontinued truck models through Bolzoni, backed by factory warranty. The firm does not disclose public details on current parts revenue share or margin differences.