10-Q: Hyster-Yale Reports Q2 Loss Amid Market Downturn

Hyster-Yale, Inc. reported a significant net loss and revenue decline in the second quarter of 2025, driven by lower lift truck demand, increased costs, and restructuring charges, leading to a deteriorated full-year outlook.

Summary

• Revenues for Q2 2025 decreased by 18.1% to $956.6 million from $1,168.1 million in Q2 2024.
• Gross profit for Q2 2025 fell by 35.1% to $168.2 million from $259.3 million in Q2 2024.
• The company reported an operating loss of $8.5 million in Q2 2025, a sharp decline from an operating profit of $95.6 million in Q2 2024.
• Net loss attributable to stockholders was $13.9 million in Q2 2025, compared to net income of $63.3 million in Q2 2024.
• Diluted earnings per share for Q2 2025 were $(0.79), down from $3.58 in Q2 2024.
• For the first six months of 2025, revenues decreased by 16.1% to $1,867.0 million, and operating profit plummeted by 92.9% to $12.8 million.
• Net cash used for operating activities was $7.5 million for the first six months of 2025, a decrease from $19.9 million provided in the same period of 2024.
• Lift truck dollar value bookings decreased to $330 million in Q2 2025 from $380 million in Q2 2024.
• The company's backlog stood at $1.65 billion at the end of Q2 2025, a significant decrease from $2.56 billion at Q2 2024.
• Restructuring and impairment charges of $15.7 million were recognized in Q2 2025, primarily due to the strategic realignment of Nuvera Fuel Cells, LLC.
• Bolzoni S.p.A. acquired a manufacturing business in Italy for $2.6 million in May 2025.
• A new $300 million secured, floating-rate revolving credit facility was entered into on June 24, 2025, maturing on June 24, 2030, replacing the previous facility.
• The company's debt to total capitalization was 46% at June 30, 2025, compared to 47% at December 31, 2024.

Sentiment

Score: 3

Explanation: The financial results show significant deterioration with substantial declines in revenue, gross profit, and a shift to net losses. The outlook has worsened due to market conditions and tariffs, and key indicators like backlog are down. While strategic initiatives are in place, their benefits are largely long-term, and near-term challenges are pronounced.

Positives

• Dividends per share increased slightly to $0.3600 in Q2 2025 from $0.3500 in Q2 2024.
• The company secured a new $300 million revolving credit facility, extending its maturity to June 24, 2030, and providing an option to increase it to $400 million.
• Strategic realignment of Nuvera Fuel Cells, LLC is expected to generate annualized cost reductions of $15 million to $20 million starting in the second half of 2025.
• Manufacturing footprint optimization programs are projected to yield significant annualized income and cash benefits ranging from $30 million to $40 million starting in 2027.
• Sales quoting activity remained steady in Q2 2025 compared to Q1 2025, indicating resilient underlying demand opportunity.
• The company maintains a disciplined capital allocation framework, focusing on reducing leverage, strategic investments, and delivering shareholder value.

Negatives

• Significant declines in revenues, gross profit, operating profit, and net income for both the second quarter and first six months of 2025 compared to 2024.
• The company incurred a net loss attributable to stockholders of $13.9 million in Q2 2025 and $5.3 million for the first six months of 2025.
• Lift truck unit volume and product mix declined, especially in the Americas and EMEA, contributing to lower revenues.
• Operating profit was negatively impacted by lower overhead absorption rates due to reduced production volume, higher material and freight costs (including tariffs), and unfavorable pricing.
• Restructuring and impairment charges of $15.7 million were recognized in Q2 2025, primarily related to the Nuvera realignment.
• Global lift truck bookings experienced a significant contraction in Q2 2025, reflecting cautious customer behavior and weaker industry booking rates.
• The company's backlog decreased substantially to $1.65 billion at June 30, 2025, from $2.56 billion at June 30, 2024, as shipments exceeded bookings.
• Full-year 2025 operating profit is anticipated to decline relative to prior guidance, with the outlook deteriorating due to tariff impacts and a greater-than-expected decline in demand.
• Bolzoni's operating profit decreased due to lower unit volumes and lower overhead absorption rates.

Risks

• Delays in delivery and other supply chain disruptions, including increases in costs due to inflation, material and component shortages, transportation costs, and labor issues.
• Imposition of tariffs on raw materials or sourced products, and retaliatory tariffs imposed by other countries, creating uncertainty and negatively affecting financial results.
• Reduced demand for lift trucks, attachments, and related aftermarket parts and services globally, including cyclical reductions in demand.
• Customer acceptance of pricing strategies, especially in a lower-demand market with increased competitive pressure.
• Delays in the development and commercialization of new products and technology related to the energy solutions program.
• Ability to access credit or obtain financing at reasonable rates due to interest rate volatility and current economic and market conditions.
• Unfavorable geopolitical and legislative developments, including new trade agreements, economic sanctions, and armed conflicts (e.g., Russia/Ukraine, Israel/Gaza, Red Sea).
• Exchange rate fluctuations, interest rate volatility, and changes in monetary policies and regulatory climates in operating countries.
• Effectiveness of cost reduction programs, including procurement, sourcing initiatives, and restructuring programs.
• Political and economic uncertainties in countries where the company does business, and the effects of any withdrawals from such countries.
• Potential bankruptcy or loss of major dealers, retail customers, or suppliers.
• Introduction of new products by competitors, more favorable product pricing, or shorter lead times from competitors.
• Product liability or other litigation, warranty claims, or returns of products.
• Changes mandated by federal, state, and other regulations, including tax, health, safety, or environmental legislation.
• Ability to attract, retain, and replace workforce and administrative employees.
• Disruptions resulting from natural disasters, public health crises, political crises, or other catastrophic events.
• Ability to protect the company's information technology infrastructure against service interruptions, data corruption, cyber-based attacks, or network breaches.

Future Outlook

The company's full-year 2025 outlook anticipates revenues, production levels, and profits to be below robust 2024 results, with the outlook deteriorating due to tariff impacts on material costs and a greater-than-expected decline in demand in the second half of 2025. Production output is expected to increase in the second half of 2025 compared to the first half, but these expectations have been moderated due to macroeconomic uncertainty and tariff pressures. Product margins are projected to remain above targeted levels in 2025 but will decline year-over-year due to increased competitive pressure. Operating expenses are expected to decline modestly year-over-year due to cost savings from the Nuvera strategic realignment. Operating profit is projected to moderately increase in Q3 2025 compared to Q2 2025. The company aims for a 7% operating profit margin across the business cycle and expects strong full-year cash flow from operations, moderately below 2024, despite projected lower net income. Capital expenditures for 2025 are forecasted to range between $50 million and $60 million.

Management Comments

• "The Company believes reduced volumes were a result of the impact of continued economic uncertainty on the Company's end-customer order patterns and overall weaker industry booking rates experienced since early 2024."
• "The Company's traditional strong customers are deferring capital expenditures, resulting in delayed purchasing decisions and a temporary softening in lift truck order activity."
• "This sustained higher quoting volume highlights resilient underlying demand opportunity and positions the Company to capitalize on market opportunities as customer confidence strengthens and capital spending accelerates."
• "Management remains focused on proactive customer engagement, closely monitoring demand trends, and preserving the Company's agility to respond quickly to ensure that the Company is well prepared to increase bookings as macroeconomic and tariff uncertainty conditions improve."
• "The Company continues to balance production levels with evolving product demand in order to maintain a multi-month production backlog."
• "However, in response to ongoing macroeconomic uncertainty and tariff pressures, the Company has moderated these production growth expectations."
• "If the bookings market or the Company's traditional customer base bookings improvements do not materialize as expected, global production levels will likely moderate further in the latter half of 2025."
• "Product margins are expected to remain above targeted levels in 2025 but decline year-over-year due to increased competitive pressure in a lower-demand market."
• "These pricing actions enable more effective margin management during this period of heightened volatility."
• "Total project expenditure estimates are in line with prior guidance, with some expected costs shifting from 2025 to 2026."
• "Starting in 2027, these fully developed programs should generate significant annualized income and cash benefits ranging between $30 million to $40 million."
• "Operating expenses are projected to decline modestly in 2025 year-over-year, primarily due to cost savings from Nuvera's strategic realignment."
• "Operating profit is projected to moderately increase in Q3 2025 compared to Q2 2025, driven primarily by higher sales volumes as a result of added consumer demand and enhanced manufacturing efficiency."
• "The Company anticipates a decline in full-year 2025 operating profit relative to prior guidance. This outlook reflects the near-term effects of reduced bookings and lower production volumes. Potential tariff costs and timing lags in mitigating actions may also create an earnings drag."
• "While the path forward likely presents demand and production volatility challenges, management is confident that its disciplined cost control actions and capital allocation efforts will position the Company to capitalize on growth opportunities as market conditions improve."
• "For the full year 2025, the Company still expects revenues, production levels and profits to be below robust 2024 results. However, outlook has deteriorated due to tariff impacts to material cost and a greater than expected decline in demand in the second half of 2025."
• "The financial discipline established over the past several years is helping the Company deliver stronger and more consistent financial results."
• "The Company targets a 7% operating profit margin across the business cycle."
• "With the expected 2025 lift truck production decrease, there is an intense focus on timely realignment of production and working capital processes."
• "These efforts support strong full-year cash flow from operations generation, moderately below those achieved in 2024, despite the projected lower 2025 net income."
• "The Company's vision is to transform the way the world moves materials from Port to Home."

Industry Context

The materials handling business is inherently cyclical, with lift truck order rates fluctuating based on economic activity. The company noted a decline in the total lift truck market during Q2 2025 and overall weaker industry booking rates since early 2024. This has led to customers deferring capital expenditures and increased competitive pressure in a lower-demand market, impacting product margins.

Comparison to Industry Standards

• The company targets a 7% operating profit margin across the business cycle, aiming to exceed this during periods of strong backlog-driven production (like early 2024) and achieve stronger results than in previous downturns during cyclically lower market demand phases. This indicates a self-benchmarking approach against its own historical performance and the cyclical nature of the industry, rather than specific competitors or projects.

Corporate Governance

Related Party Transactions

• Investments in Sumitomo NACCO Forklift Co., Ltd. (SN), a 50%-owned joint venture, and HYG Financial Services, Inc. (HYGFS), a 20%-owned joint venture, are accounted for by the equity method.
• HYGFS provides debt and lease financing to dealers and customers, with approximately $134.0 million of the company's total recourse or repurchase obligations related to transactions with HYGFS at June 30, 2025.
• The company provides a guarantee to Wells Fargo Financial Leasing, Inc. (WF) for 20% of HYGFS debt with WF, totaling $285.2 million at June 30, 2025, for loans from WF to HYGFS of $1.4 billion.

Stakeholder Impact

• Shareholders: Experienced a net loss and significant decline in EPS, but dividends per share increased slightly. The outlook for full-year profits has deteriorated.
• Employees: Restructuring and impairment charges included $1.0 million of employee-severance costs related to the Nuvera strategic realignment.
• Customers: Facing continued economic uncertainty, leading to deferred capital expenditures and delayed purchasing decisions for lift trucks. The company is implementing monthly price adjustments to address tariff changes.
• Suppliers: Subject to supply chain disruptions, increased material and freight costs, and potential tariff impacts.
• Creditors: The company entered into a new $300 million revolving credit facility, extending maturity and providing additional borrowing capacity, indicating continued access to financing.

Next Steps

• Continue to implement proactive initiatives, including price adjustments, changes to global product sourcing, supply chain adjustments, and cost optimization programs to mitigate tariff impacts.
• Monitor booking trends closely and maintain agility to respond to macroeconomic and tariff uncertainty.
• Balance production levels with evolving product demand to maintain a multi-month production backlog.
• Execute manufacturing footprint optimization programs, with additional expenditures expected through 2026 and significant annualized benefits starting in 2027.
• Integrate Nuvera's costs into the Lift Truck business to fill open positions and accelerate development of lithium-ion batteries and mobile charging products.
• Focus on generating strong operating cash flow and accretive capital deployment, including working capital efficiency initiatives like inventory optimization.
• Adjust investment levels and timing for capital expenditures based on market visibility.

Key Dates

Recommendation

The company's Q2 2025 results show a significant deterioration in financial performance, with substantial declines in revenue, gross profit, and a shift to net losses. The backlog has decreased considerably, indicating weakening future sales. Management's revised full-year outlook is also negative, citing tariff impacts and a greater-than-expected decline in demand. While strategic initiatives are underway, their material benefits are largely long-term, and the near-term challenges, compounded by macroeconomic uncertainty and competitive pressures, suggest a negative trajectory for the stock. A seasoned investor would likely view these results and outlook as a strong signal to reduce or exit positions.

Keywords

Lift Trucks, Material Handling, Forklifts, Industrial Equipment, Aftermarket Parts, Supply Chain, Tariffs, Restructuring, Nuvera Fuel Cells, Bolzoni, SEC Filing, Quarterly Report, Financial Results, Operating Loss, Backlog, Economic Uncertainty, Capital Expenditures