HYSTER-YALE, INC. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Hurricane Impact: Employees in SE US safe; operations not directly affected; supported dealers, suppliers, and communities in affected areas.
• Q3 Results: Executed well in seasonal quarter but below expectations due to supply chain constraints and product introduction issues. Strong product margins, but missed production volumes led to inefficiencies and higher costs.
• Market Views: Global lift truck market declined in Q3 2024, expected to further decline in Q4 and 2025; Americas expected to stabilize, EMEA moderate decrease, JAPIC stabilize; focus on share gains and new technology products.
• Bolzoni Performance: Strong Q3 with 5% revenue growth, operating profit up over 100% due to higher-margin products and efficient manufacturing.
• Nuvera Status: Focus on increasing demonstrations and orders, but industry constraints (hydrogen supply delay) impact revenues.
• Cost and Productivity Initiatives: Investing in strategic initiatives (sales/marketing staff, new info systems); restructuring in Americas to optimize operations and costs.

Segment Performance

• Lift Truck: Revenues grew 2% year-over-year due to higher average sales prices and favorable sales mix. Americas sales volumes increased but EMEA volumes declined. Operating profit was $39 million, down 40% year-over-year. Product margins remained high but offset by lower margins on parts and fleet services. Gross profit declined 7% year-over-year due to sales margins, freight costs, and cost inflation.
• Bolzoni: Revenues increased 5% year-over-year, operating profit improved over 100% due to higher-margin products and efficient manufacturing. Acquired a majority equity interest in a machining supplier in July.
• Nuvera: Revenues $0.3 million in Q3 2024, down from $1.5 million in Q3 2023. Industry constraints (hydrogen supply, delayed vehicle fuel cell development) delayed bookings and shipments; focused on increasing customer demonstrations and orders.

Guidance

• Q4 Outlook: Consolidated revenues and net income roughly comparable to prior year. Lift Truck revenues and operating profit roughly flat year-over-year, offset by higher freight and material costs. Bolzoni Q4 revenues lower, operating profit likely down. Nuvera Q4 revenues expected to increase, but operating loss may increase.
• 2025 Outlook: Lift Truck revenue to decrease, operating profit significantly lower; Bolzoni operating profit to improve despite lower sales; Nuvera revenues to improve in 2025, but new product costs may moderate benefits. Backlog expected to decrease toward normalized levels by mid-2025, bookings to accelerate in H2 2025.

Risks

• Supply Chain: Constraints and shipping delays in EMEA affected production volumes and shipments.
• Market Volatility: Global lift truck market decline and cyclicality impact revenues and margins.
• Hydrogen Industry: Delayed hydrogen supply and customer adoption impact Nuvera's bookings and shipments.
• Cost Inflation: Elevated freight costs, material costs, and employee-related expenses pressure margins.

Question and Answer

Q: Weakness in EMEA, supply chain and reworks?

A: EMEA shipments affected by product intro issues, rework, and component availability; stabilizing and expected to improve in 2025 Q1.

Q: Cost and productivity initiatives, timeline for benefits?

A: Modular scalable product development ongoing, detailed analysis in H1 2025, benefits expected end of 2026.

Q: Inventory, free cash flow, working capital in 2025?

A: Inventory elevated due to transport and logistic delays; Q4 cash flow to increase, working capital target 15% of sales by 2025.

Q: Nuvera growth, timing, severance?

A: Hydrogen market deferred due to hydrogen availability; $0.2M severance for operational optimization; pilot programs in late 2026/2027.

Q: Bolzoni expenses, acquisition, 2025 outlook?

A: Acquisition impact on Q3 costs, 2025 operating profit expected to improve; SG&A adjusted for inflation.

Q: CapEx, tax rate?

A: CapEx prioritized on operational footprint optimization, some programs pushed to 2026; full-year 2024 tax rate 32%, 2025 guidance in Q4 call.

Q: North American market, market share, parts mix?

A: North America expected to stabilize, aiming to gain market share; parts mix shift from repair to preventive maintenance, electrification affecting long-term parts profile.