Material handling manufacturer Hyster-Yale reduced backlog and increased sales in the first quarter of 2024 as supply chain and lead time improvements accelerated growth. Still, the growth comes as loans from Wells Fargo Financial Leasing increased and dividends decreased year over year.
HYG Financial Services (HYGFS), a joint venture owned 20% by Hyster-Yale to provide lift truck financing for Hyster-Yale dealers and customers in the United States, received loans from Wells Fargo totaling $1.3 billion, an increase of 8.3% YoY but flat sequentially. Hyster-Yale’s dividends from HYGFS were $4.4 million in Q1, down 22.8% YoY, according to the company’s 10-K filing with the Securities and Exchange Commission.
Wells Fargo Financial Leasing owns the remaining 80% of the joint venture.
Hyster-Yale’s incremental obligation to Wells Fargo, which excludes receivables guaranteed from HYGFS’ loans, is $241.8 million, up 2.2% quarter over quarter and 11.6% YoY. The obligations are secured by 20% of HYGFS’ customer receivables and other secured assets of $310.1 million, up 1.2% QoQ and 9.5% YoY, according to the filing.
BY THE NUMBERS:
Hyster-Yale dealer sales, direct sales and revenue increased in Q1, while order backlogs, bookings and shipments declined, as the manufacturer worked through its backlog, President and Chief Executive Rajiv Prasad said during the company’s May 8 earnings call.
For the first quarter, Hyster-Yale reported:
- Dealer sales for the Americas of $431.9 million, up 18.6% YoY;
- Direct sales for the Americas of $129.8 million, an increase of 6% YoY;
- Total revenue of $1.1 billion, up 5.7% YoY;
- Total order backlog of 73,600 units, down 6.1% QoQ and 25.8% YoY;
- Unit shipments of 23,200, down 7.9% YoY; and
- Unit bookings of 18,400, down 17.5% YoY.
WHAT THEY’RE SAYING: Analysts are confident in Hyster-Yale’s overall position following the earnings release, Chip Moore, managing director and senior research analyst at equity research firm Roth MKM, told Equipment Finance News.
“Underlying platform positioning continues to improve, in our view, with investments in key strategic initiatives (modularity, electrification and automation) set to accelerate more meaningfully this year (now that capital constraints are abating),” Moore said in the Roth MKM research note. “While cyclical concerns remain (buffered somewhat by backlog coverage), we continue to favor the current opportunity.”
THE BIG PICTURE:
Hyster-Yale’s sales growth was the result of supply chain improvements facilitating better production and a more favorable product mix, CEO Prasad said.
“As production and shipment rates increase, we foresee backlog levels and lead times on many product lines reaching target levels by yearend,” he said. “As expected, our $3.1 billion backlog, which is equal to approximately nine months of production combined with new unit bookings, is supporting the business through any near-term market weaknesses.”
Q1 also marks the fourth consecutive quarter of more than $1 billion in revenue for Hyster-Yale, Scott Minder, senior vice president, chief financial officer and treasurer, said during today’s earnings call.
Shares of Hyster-Yale Materials Handling Inc. (NYSE: HY) were up 8.35% or $6.09 from market open to $79.01 as of market close today. Hyster-Yale has a market capitalization of $1.28 billion. Hyster-Yale’s stock rose more than 32% this week following the company’s earnings release.
