Forklifts aren't exactly the sexiest side of the business world, but companies still need them to handle their logistics and handling needs. Hyster-Yale Materials Handling (NYSE:HY) plays a major role in providing lift trucks to its customers, and it has sought to cash in on greater demand among its customer base for forklifts as conditions in some of the end markets its clients serve get steadily better.

Coming into Tuesday's fourth-quarter financial report, Hyster-Yale investors wanted to see substantial gains in earnings and revenue. Hyster-Yale's results showed solid growth, although some of the rises in key financial metrics weren't as big as some had hoped. Let's take a closer look at Hyster-Yale and what its latest results say about its future.

One forklift lifting a pallet, and a worker in a line of lift trucks.

Image source: Hyster-Yale.

Hyster-Yale finishes 2017 strong

Hyster-Yale's fourth-quarter results were largely encouraging. Revenue jumped 15% to $795.5 million, which was far better than the consensus forecast among those following the stock for a roughly 7% sales gain. Adjusted net income of $16 million worked out to adjusted earnings of $0.97 per share, and although that was higher than year-earlier figures, it fell short of the $1.06 per share that most investors were looking to see.

Tax reform had a marked downward impact on Hyster-Yale's results. The company said that it took an expense of $38.2 million, due to the one-time tax on deemed repatriated earnings from overseas operations and the remeasurement of deferred tax assets and liabilities under new corporate tax rates.

Yet Hyster-Yale saw good results from a fundamental perspective. Operating profit from the lift truck business jumped by nearly half, with a 15% rise in segment sales coming from a solid gain in unit demand. Shipments for the quarter rose by 3,000 to 25,900 units, and bookings of 24,600 units were up 1,800 from the fourth quarter of 2016. Worldwide backlog of 33,800 units, or $860 million in value, compared favorably with numbers that were roughly 10% to 15% lower a year ago.

From a geographical perspective, Hyster-Yale enjoyed good conditions throughout the world. Revenues in the Americas were up 12%, with greater sales into the North American market. Operating profit gains came from better pricing that outweighed rises in materials costs. Hyster-Yale did even better in Europe, the Middle East, and Africa, posting 23% segment sales gains as operating profit jumped by more than half. Favorable currency impacts added to the organic gains. More modest growth in the Asia-Pacific region led to a narrowing of operating losses.

Hyster-Yale's smaller subsidiaries had mixed performance. Attachment specialist Bolzoni saw solid revenue growth and eked out a small net profit, while the Nuvera fuel-cell stack and engine company kept on losing money with only minimal sales.

Can Hyster-Yale keep up the pace?

The problem that Hyster-Yale faces is that it'll be hard for it to match its 2017 performance in the coming year. In the Americas, the company sees a more moderate rate of growth for 2018, although initiatives built to improve market share penetration should help boost results. Higher costs could weigh on first-half results in the European region, although pricing increases slated for the second half of the year could help to make back some of that last ground. In the Asia-Pacific segment, Chinese weakness will likely hurt sales, with Hyster-Yale trying to implement cost-saving initiatives to boost operating performance.

Yet Hyster-Yale will at least see some long-term benefits from tax reform. The company believes that its effective income tax rate should come in between 21% to 24% in 2018, and although a substantial part of its business comes from outside the U.S. and therefore won't be as directly affected by lower corporate tax rates here than its domestic operations, Hyster-Yale sees net income increasing substantially in the long run.

Hyster-Yale investors didn't react immediately to the news, and the stock was unchanged in after-hours trading following the announcement. Still, with some factors starting to turn in its favor, Hyster-Yale could surprise investors by managing to keep up its strong growth momentum further into 2018 than even the company itself believes is likely right now.

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