An uptick in dealer sales contributed to increased year-over-year revenue in the second quarter for material handling manufacturer Hyster-Yale, while dividends from its jointly owned financing arm, HYG Financial Services, decreased.
HYGFS, which provides financial services to independent Hyster-Yale lift truck dealers and national account customers, is 20% owned by Hyster-Yale and 80% owned by Wells Fargo Financial Leasing. HYGFS’ loans from Wells Fargo totaled $1.4 billion in Q2, up 16.7% year over year. Hyster-Yale reported $4.4 million in dividends from HYGFS, down 58% YoY, according to the company’s 10-K filing with the Securities and Exchange Commission.
Hyster-Yale’s incremental obligation to Wells Fargo, excluding receivables guaranteed from HYGFS’ loans, stood at $243.4 million in Q2, up 0.7% quarter over quarter and 10% YoY. The obligations are secured by 20% of HYGFS’ customer receivables and other secured assets of $318.9 million, an increase of 2.8% QoQ and 10.4% YoY.
BY THE NUMBERS: Hyster-Yale’s YoY revenue growth came despite a significant drop in direct sales in the Americas and factory bookings, as favorable pricing and a large backlog helped offset some losses, Chief Executive Rajiv Prasad said in the company’s Aug. 7 earnings call.
“Over the past 18 months, our results have benefited from strong pricing tailwinds and a significant order backlog, which led to product margins above our target levels,” he said. “Looking forward, we are focused on maintaining competitively priced products at or above target margin levels.”
Hyster-Yale reported the following in Q2:
- Total revenue of $1.2 billion, up 7% YoY;
- Dealer sales for the Americas of $580.7 million, up 40.7% YoY;
- Direct sales for the Americas of $78 million, down 55.7% YoY;
- Operating profit of $95.6 million, up 77.7% YoY;
- Order backlog totaling $2.6 billion, down 28.9% YoY; and
- Factory bookings totaling $380 million, down 44.1% YoY, with bookings for the Americas falling 56% YoY to $230 million.
NOTEWORTHY: Hyster-Yale changed how it measures order backlog and factory bookings in Q2, providing total dollar values instead of unit counts. The change was made because the company is rapidly becoming “solutions-based,” Prasad said in the earnings call.
“We’re increasingly focused on complex, value-adding technology solutions for our customers that include trucks as well as advanced on-truck technologies,” he said. “Additionally, per-unit truck sales values differ substantially across the product lines. As a result, aggregate unit bookings data is less meaningful when analyzing our performance.”
STATE OF PLAY: Prasad attributed the drop in bookings to lingering challenges from the pandemic, which led to supply chain shortages as demand skyrocketed, he said during the call. He also highlighted order cancellations, shorter lead times and requests to delay shipments of current backlog orders as reasons for the decline.
MARKET OUTLOOK: Shares of Hyster-Yale [NYSE: HY] were down 16.1% from market open to $58.52 as of market close Aug. 7. The company has a market cap of $1.06 billion.
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