Hyster-Yale(US:HY)2020-02-25 22:04Company Overview - Hyster-Yale Materials Handling, Inc. is a leading global manufacturer of lift trucks, offering a wide range of solutions including hydrogen fuel cell products and automation services [93]. - The company owns a 75% majority interest in Hyster-Yale Maximal, a Chinese manufacturer of low-intensity and standard lift trucks, which contributes to the JAPIC segment [94]. - Bolzoni S.p.A., operated by the company, is a major producer of lift truck attachments, with manufacturing facilities in the United States, Italy, China, Germany, and Finland [95]. Financial Performance - In 2019, the company's revenues increased to $3,291.8 million, up from $3,179.1 million in 2018, representing a 3.5% growth [124]. - The gross profit for 2019 was $541.8 million, compared to $497.0 million in 2018, reflecting a 9.0% increase [126]. - The company's net income attributable to stockholders rose to $35.8 million in 2019, a 3.2% increase from $34.7 million in 2018 [126]. - The diluted earnings per share for 2019 was $2.14, up 2.4% from $2.09 in 2018 [126]. - Net income for 2019 was $36.6 million, an increase of $2.3 million from $34.3 million in 2018 [163]. - Cash dividends paid in 2019 were $21.0 million, a slight increase from $20.4 million in 2018 [166]. - Total equity increased to $577.0 million in 2019, up by $17.5 million from 2018 [187]. Revenue and Sales Trends - Lift truck unit shipments in the Americas decreased by 2.9% to 59.3 thousand units in 2019, while JAPIC saw a significant increase of 16.7% to 12.6 thousand units [125]. - Revenues increased by 3.5% to $3,291.8 million in 2019 from $3,179.1 million in 2018, primarily due to improved pricing and higher sales of attachments [130]. - Revenues in the Americas increased due to improved pricing and higher parts sales, while EMEA revenues decreased by $40.8 million due to unfavorable currency movements [131]. - JAPIC revenues increased due to a full year of Hyster-Yale Maximal revenues, partially offset by unfavorable foreign currency movements of $6.3 million [132]. - Bolzoni's revenues decreased by $10.7 million due to unfavorable foreign currency movements, despite higher volume [133]. - Nuvera's revenues decreased primarily due to previously deferred revenue recognized in Q4 2018, partially offset by increased development funding [134]. Operating Profit and Expenses - Operating profit rose to $53.9 million in 2019 from $38.8 million in 2018, driven by higher lift truck gross profit [135]. - The company's interest expense for 2019 was $19.8 million, an increase of 23.8% from $16.0 million in 2018 [126]. - Operating profit in the Americas was impacted by higher selling, general and administrative expenses and unfavorable foreign currency movements [136]. - EMEA's operating profit increased due to higher gross profit from price increases, net of higher material costs [137]. - Bolzoni's operating profit decreased due to $2.5 million in restructuring costs related to manufacturing transfers [139]. Cash Flow and Investments - Net cash provided by operating activities increased by $9.1 million in 2019, totaling $76.7 million compared to $67.6 million in 2018 [163]. - The company had a net cash used for investing activities of $42.0 million in 2019, a decrease of $68.9 million from $110.9 million in 2018 [164]. - The company plans to invest $86.1 million in capital expenditures for 2020, significantly higher than the $49.7 million spent in 2019 [186]. - Consolidated cash flow before financing activities is expected to increase significantly in 2020 compared to 2019 [202]. Market and Competitive Landscape - The materials handling industry is highly competitive, with competition based on distribution strength, brand loyalty, and product performance [98]. - The company plans to expand its capabilities in emerging markets and enhance its position in the attachments and fuel cells sectors [100]. - The company is focused on mid-term business improvement in market position and profitability, aligning with investor objectives [205]. Future Outlook - Lift Truck's operating profit is expected to improve significantly in 2020, with a target operating profit margin of 7% assuming reasonable market conditions [191]. - The introduction of new modular and scalable product families is expected to enhance market position and provide lower total cost of ownership, with the first products launching in the second half of 2020 [192]. - Bolzoni's operating profit is projected to increase in 2020, benefiting from the absence of $2.5 million in restructuring charges [191]. - Nuvera's shipments are expected to ramp up throughout the second half of 2020, with significant improvements anticipated from 2021 to 2023 [191]. - The company anticipates significant increases in operating profit and net income for 2020 compared to 2019, driven by the maturation of strategic investments [201]. Challenges and Risks - The company is experiencing ongoing supplier shortages but has successfully resolved most issues from 2019, with some lingering effects expected in Q1 2020 [201]. - The impact of the Coronavirus epidemic has delayed production startup in China, but ramp-up is expected in the coming weeks [204]. - The company forecasts strong but lower forklift market levels across all geographic segments in 2020, amid a projected moderate downturn [203].