Earnings Labs

Hyster-Yale Materials Handling, Inc. (HY)

Q4 2024 Earnings Call· Wed, Feb 26, 2025

$39.32

-0.14%

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Transcript

Operator

Operator

Good morning, ladies and gentlemen, and welcome to the Hyster-Yale Materials Handling, Inc. Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Wednesday, February 26, 2025. I would now like to turn the conference over to Andrea Saba. Please go ahead.

Andrea Saba

Management

Good morning, and thank you for joining us for Hyster-Yale Materials Handling, Inc. 2024 fourth quarter earnings call. I'm Andrea Saba, the Director of Investor Relations and Treasury. Joining me today are Al Rankin, Executive Chairman, Rajiv Prasad, Chief Executive Officer, and Scott Minder, Senior Vice President, Chief Financial Officer, and Treasurer. During our call, we will be discussing our fourth quarter and full year 2024 earnings release issued yesterday. You can find the earnings release and replay of this webcast on the Hyster-Yale Materials Handling, Inc. website. The replay will remain available for approximately twelve months. Today's conference call contains forward-looking statements which are subject to risks that could cause actual results to be materially different from those expressed or implied. These risks are described in greater detail in the earnings release and in our reports filed with the SEC. On this call, we will be discussing our adjusted results. We believe that these are useful in evaluating the company's operating performance. Reconciliation of adjusted operating profit, net income, and earnings per share to the most directly comparable GAAP financial measures can be found in the company's earnings release and investor presentation filed with the SEC. With the formalities out of the way, let me turn the call over to Rajiv to begin.

Rajiv Prasad

Management

Thanks, Andrea. And good morning, everyone. I'll start by providing my operational perspective and some commentary on our markets. Scott will follow with our detailed financial results and outlook. Al will close the call with his perspective and then we'll open it up for your questions. As we close out 2024, I'd like to start by recognizing our global team for delivering another solid quarter and a strong finish to an already exceptional year. In quarter four, we generated higher revenue and improved adjusted operating profit versus the prior year and the prior quarter. These strong results were led by the performance of our team. We began execution on the footprint optimization programs that we shared with you in our quarter three earnings call. These programs are designed to streamline our manufacturing network and optimize our operations. These programs should lower our cost and reduce our inventories and product lead times. This will better position the company for profitable growth around the world. As a result of these actions, we incurred a $21 million cost primarily initiated in the fourth quarter to streamline our manufacturing footprint and optimize operations. As we further deploy these programs in 2025 and 2026, we expect additional implementation costs ranging from $8 to $16 million in each of the years. These programs are designed to reduce the negative impact from market cyclicality on our business over time. Program benefits are expected to begin in late 2025 but will be offset by operational inefficiencies due to lower total production driven by decreased market demand. Benefits in 2026 are expected to be small as we finalize the programs. Savings are expected to accelerate, generating $30 to $40 million in annual income and cash benefits starting in 2027. In the Americas, we are focused on programs to right-size…

Scott Minder

Management

Thanks, Rajiv, and good morning. As you just heard, our revenues and adjusted profits improved year over year and sequentially. We had a strong year and ended with a solid quarter. I'll start by briefly covering our full-year consolidated results. We reported 2024 revenues of $4.3 billion, a 5% improvement over the prior year. Our year-over-year top-line growth significantly outpaced the global GDP growth rate. Full-year adjusted operating profit of $267 million improved by nearly $60 million versus the prior year. 2024's adjusted operating profit margin was 6%, representing the strongest full-year performance in the company's history. These gains were largely due to the performance of our lift truck business, where revenues grew by 5% and adjusted operating profits improved by 28%. 2024's adjusted net income was $159 million, increasing 26% from the strong prior year period. 2024 was a strong year, and we took the opportunity to further fund our strategic initiatives. We invested in additional sales and marketing staff to help accelerate new product introductions and support our share gain efforts. We invested in new information technology tools. We initiated the footprint optimization journey enabled by our new modular products. As Rajiv stated, this will ultimately save us tens of millions of dollars per year and reduce the negative impact of market cyclicality on the business. To close out our strong 2024 performance, our fourth-quarter results were solid at the consolidated level. Revenues of $1.1 billion grew by 4% versus the prior year and by 5% sequentially. Adjusted operating profits were $54 million, increasing by 10% and by nearly 60% compared to the prior year and prior quarter, respectively. Adjusted earnings per share was $1.47. Next, I'll provide color by segment and geography on the quarter's performance drivers, starting with our lift truck business. Q4 lift truck sales…

Al Rankin

Management

Thanks, Scott. I want to emphasize the significance of the information Rajiv and Scott have shared today. We had a strong 2024 that built upon the previous year's results, which were robust by historical standards. We exceeded our initial expectations despite a substantial market decline and significant geopolitical uncertainty. This was largely due to our lengthy and margin-rich backlog built during the robust lift truck markets of 2022 and 2023. I'd like to take this opportunity to commend our global team for delivering these strong results. Looking forward, our path forward is guided by sound long-term core strategies. I'm confident we have the right team and business structure in place to execute our key strategic programs, weather the near-term cyclical downturn, achieve our long-term financial goals, and provide strong shareholder returns over time. And with that, we'll take your questions.

Operator

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to decline from the polling process, please press star followed by the two. And if you are using a speakerphone, please lift the handset before pressing any keys. The first question comes from Ted Jackson at Northland Securities. Please go ahead.

Ted Jackson

Analyst

Oh, thanks. Thanks for taking my questions. Good morning. So I wanted to start out, Al, I believe last quarter when you had discussed the market outlook for 2025, kind of based off industry data, that the view was that a weaker first half, a stronger second half. And that, you know, for the full year of 2025, that, you know, the bookings market for the trucks globally would be more or less flat. When I go through, you know, the commentary with regards to the quarter and what you presented, it sounds like that view has tempered somewhat and that the market on a global level maybe will be down. Is that the right way to read the commentary that I've gotten from you all? That's my first question.

Rajiv Prasad

Management

Hey, Ted. This is Rajiv. I'll take that question. I think our guidance is pretty consistent with what we said last time. We do expect the first half to be lower, of course, as we've stated. We do see a, you know, from our projections, we see an increase in the second half of the year, as Scott said, and then we are going into a pretty good 2026. I think we've described why we had the downturn. It's because of the overbooking we saw in 2022 and 2023, which moderated and then really curtailed in the second half of 2024. The other thing that we hadn't talked about last time is towards the end of the year, after our conference call, we saw an increase in cancellations. I assume that was driven by customers really adjusting their demand for the upcoming year. So that, you know, we talked a little bit about we brought the production rates below what we had anticipated. And those two elements were the big drivers for it: the market dropped more than we expected, and then we got higher cancellations than we were anticipating. So we adjusted for that. We expect, you know, if I just look at the last couple of months, we, you know, we haven't seen the same scale of cancellations, nowhere near. We have seemed to be back to normal kind of levels. So we expect that to moderate. We still expect the market to be low in the first half, but then come back in the second as some of the, you know, the orders that were placed prior get consumed by, you know, customers and applied. That makes sense. Hello?

Operator

Operator

Apologies. As we did seem to lose the caller, I can turn it back over to Andrea for any closing comments at this time.

Andrea Saba

Management

Thank you for your questions. We'll now conclude our Q&A session. Thank you for participating. A replay of our call will be available online later today. We'll also post a transcript on the Hyster-Yale Materials Handling, Inc. website when it becomes available. If you have any questions, please reach out to me. My contact information is on the earnings release. I hope you enjoy the rest of your day. And now, I'll turn it back to Joanne to conclude the call.

Operator

Operator

Thank you, ladies and gentlemen. This concludes your conference call for today. A replay will be available until March 5, 2025, by dialing 1-888-660-6345 and entering conference code 49516. We thank you for participating and ask that you please disconnect your lines.