Hyster-Yale(HY) - 2022 Q2 - Quarterly Report

Part I: Financial Information Financial Statements The company's financial statements show increased assets but a significant net loss due to rising costs, though operating cash flow improved Unaudited Condensed Consolidated Balance Sheets Total assets grew to $2.05 billion while total equity sharply decreased due to a significant rise in liabilities Consolidated Balance Sheet Summary (in millions) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $1,469.8 | $1,350.0 | | Total Assets | $2,052.8 | $1,970.1 | | Total Current Liabilities | $1,329.4 | $1,104.6 | | Total Liabilities | $1,829.4 | $1,587.2 | | Total Equity | $207.5 | $382.9 | Unaudited Condensed Consolidated Statements of Operations Despite revenue growth, the company reported a net loss of $19.4 million in Q2 2022, a reversal from a net income position in Q2 2021 Q2 and H1 2022 vs 2021 Performance (in millions, except per share data) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $895.4 | $765.6 | $1,723.0 | $1,497.8 | | Gross Profit | $99.1 | $116.4 | $200.3 | $234.8 | | Operating Profit (Loss) | $(15.7) | $5.9 | $(34.0) | $9.0 | | Net Income (Loss) Attributable to Stockholders | $(19.4) | $1.9 | $(44.4) | $7.5 | | Diluted EPS | $(1.15) | $0.11 | $(2.63) | $0.45 | Unaudited Condensed Consolidated Statements of Cash Flows Operating cash flow improved significantly to near breakeven for the first half of 2022 compared to a large cash use in the prior year Six Months Ended June 30 Cash Flow Summary (in millions) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by (used for) operating activities | $0.2 | $(100.7) | | Net cash provided by (used for) investing activities | $(22.9) | $0.8 | | Net cash provided by financing activities | $33.5 | $37.5 | | Increase (decrease) in Cash and Cash Equivalents | $10.1 | $(63.9) | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail segment performance, revenue recognition, and significant derivative contracts for hedging market risks - The company operates through three main business units: Hyster-Yale Group (lift trucks), Bolzoni (attachments), and Nuvera (fuel cells)[16] Q2 2022 Segment Operating Profit (Loss) (in millions) | Segment | Q2 2022 Operating Profit (Loss) | | :--- | :--- | | Americas | $3.1 | | EMEA | $(10.8) | | JAPIC | $(4.0) | | Bolzoni | $3.4 | | Nuvera | $(7.9) | - The company holds forward foreign currency exchange contracts with a total notional amount of $1.1 billion and interest rate swap agreements with a notional amount of approximately $201.8 million as of June 30, 2022[48][50] - The company has recourse or repurchase obligations totaling $130.7 million as of June 30, 2022, primarily related to customer financing arrangements[62] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses how revenue growth was offset by cost inflation, leading to an operating loss, but maintains a robust backlog Financial Review Q2 2022 revenue rose 17.0% YoY, but an operating loss resulted from material and freight cost inflation outpacing price increases Components of Revenue Change - Q2 2022 vs Q2 2021 (in millions) | Component | Change | | :--- | :--- | | Price | $59.9 | | Unit volume and product mix | $54.2 | | Parts | $19.9 | | Foreign currency | $(19.4) | | Total Change | $129.8 | - The decrease in Q2 operating profit was primarily driven by significant material and freight cost inflation and manufacturing inefficiencies totaling $85.9 million, which more than offset the favorable impact of improved pricing[82] Unit Backlog and Approximate Sales Value | Metric | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Unit Backlog (thousands) | 112.0 | 84.9 | | Backlog Value (millions) | $3,530 | $2,070 | Liquidity and Capital Resources The company's liquidity is supported by improved operating cash flow and available credit facilities, deemed sufficient for the next year - Operating cash flow improved by $100.9 million in H1 2022 compared to H1 2021, primarily due to a smaller increase in inventory levels and an increase in customer down payments[100] - At June 30, 2022, the company had $165.7 million of borrowings outstanding under its main revolving credit facility, with $130.0 million of availability[103] - Capital expenditures for 2022 are planned to be approximately $33.4 million, a reduction from $44.3 million in 2021, to protect liquidity[113] Outlook and Strategic Perspective The company anticipates a larger Q3 loss but a return to profitability in Q4, driven by strategic product launches and pricing actions - The company anticipates a larger net loss in Q3 2022 but expects to return to net income in Q4 2022, however, the Q4 profit is not expected to offset losses from the first nine months[115] - The company is managing liquidity by controlling 2022 capital expenditures (approx. $33 million) and operating expenses, and expects to significantly reduce inventory in the second half of 2022[116] - Core strategies for the Lift Truck business focus on: 1) providing the lowest cost of ownership with new modular products, 2) leading in industry-focused solutions, and 3) leading in independent distribution[122] Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its market risk exposures since the end of the previous fiscal year - There have been no material changes in the Company's market risk exposures since December 31, 2021[131] Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls during the quarter - Based on an evaluation, the principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2022[132] - No changes in internal control over financial reporting occurred during the second quarter of 2022 that materially affected, or are reasonably likely to materially affect, these controls[133] Part II: Other Information Legal Proceedings The company reports no material legal proceedings for the period - There are no material legal proceedings to report[135] Risk Factors No material changes were reported to the risk factors previously disclosed in the 2021 Annual Report - No material changes have been made to the risk factors disclosed in the 2021 Annual Report on Form 10-K[135] Exhibits This section lists all exhibits filed with the report, including required officer certifications and XBRL data - The exhibits filed with this report include certifications from the CEO and CFO pursuant to SEC rules and the Sarbanes-Oxley Act, as well as Inline XBRL documents[136]