Image source: Hyster-Yale Materials Handling.
Investors started this week anticipating that Hyster-Yale Materials Handling (HY 0.03%) would turn in year-over-year declines in both revenue and earnings for the second quarter. But following the lift-truck manufacturer's mixed results Monday after the market close, shares have plunged around 14%. Let's take a closer look at how the lift-truck manufacturer capped the first half of the year, and what to expect going forward.
Hyster-Yale Materials Handling results: The raw numbers
|
Q2 2016 Actuals |
Q2 2015 Actuals |
Growth (YOY) | |
|---|---|---|---|
|
Revenue |
$645.6 million |
$658.7 million |
(2%) |
|
Net Income |
$8.3 million |
$22.7 million |
(63.4%) |
|
Earnings per share (diluted) |
$0.51 |
$1.39 |
(63.3%) |
Data source: Hyster-Yale Materials Handling.
What happened with Hyster-Yale Materials Handling this quarter?
- Hyster-Yale didn't provide specific financial guidance for the quarter. But for perspective -- and while we don't pay close attention to Wall Street's short-term demands -- analysts' consensus estimates predicted lower revenue of $632.3 million, and higher earnings of $0.85 per diluted share.
- This quarter also included $39 million in revenue, and roughly $100,000 of net income from Bolzoni -- the company in which Hyster-Yale Capital Holding Italy acquired a 94% ownership stake during the quarter, for $115.5 million. Hyster-Yale acquired the remaining outstanding interest in Bolzoni for $7.6 million early last month.
- Net income this quarter was impacted by acquisition costs totaling $2.9 million (pre-tax) in Hyster-Yale's lift-truck segment, and an additional $1.6 million tax expense related to accumulated non-deductible acquisition costs.
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $23.3 million.
- Revenue declines came as progress in Hyster-Yale's warehouse market strategic initiative was more than offset by a shift in mix to lower-priced, lower-margin products.
- Lift-truck business revenue declined 7.9% year over year, to $606.5 million, while lift-truck segment net income was cut in half, to $13.1 million.
- Lift-truck consolidated worldwide new-unit shipments declined 5.8%, to 21,100.
- Bookings during the quarter were 21,700 units, or roughly $500 million, up from 21,400 units, or roughly $495 million, in the same year-ago period.
- Worldwide backlog as of June 30, 2016 was 30,500 units, or roughly $715 million, down from 30,900 units, or $715 million at the same time last year, and up from 29,900 units, or $670 million at the end of the first quarter.
- By geography:
- Americas segment revenue declined 11% year over year, to $411.8 million, as shipments declined by 1,300 units year over year in Q2. Strong shipments in Latin America were offset by a more than 30% decline in Brazil in the first half of the year, as well as a decline in North America shipments of Class 1, Class 2, and Class 5 trucks.
- EMEA segment revenue grew 6% year over year, to $155.6 million, as unit shipments increased approximately 300 units year over year.
- JAPIC segment revenue -- which includes Asia and Pacific markets, including China and equity earnings of the Sumitomo-NACCO operations -- declined 18.9% year over year, to $39.1 million, driven by a 300-unit decline in shipments, as well as a shift in product mix to lower-priced lift trucks and deal-specific pricing.
What Hyster-Yale expects looking forward
Hyster-Yale didn't offer specific financial guidance for revenue or earnings in the current quarter. During the subsequent conference call, however, management stated that the company anticipates global markets for its lift-truck business in the second half of 2016 to be comparable with the second half of 2015. On a geographic basis, continued growth in the EMEA region will likely be offset by continued declines in the Americas.
Perhaps more encouraging -- and despite operating in a difficult market right now -- Hyster-Yale Materials Handling expects unit shipments and parts sales to increase in the second half of 2016 on a year-over-year basis, driven by the company's market-share gains, and success in winning new business at large customer accounts. Though these gains will be offset by the aforementioned shifts in product mix, that success should leave Hyster-Yale nicely positioned to emerge a stronger company once these market headwinds abate.
