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Hyster-Yale Beats Q2 Earnings Estimates

Zacks Equity Research

Hyster-Yale Materials Handling, Inc.’s (HY) earnings increased an impressive 86% to $2.16 per share in the second quarter of 2013 from $1.16 in the year-ago quarter. The result was way ahead of the Zacks Consensus Estimate of $1.18. The year-over-year growth was attributable to the favorable effect of price increase.

Operational Updates

Revenues in the reported quarter increased 9.6% year over year to $660 million, beating the Zacks Consensus Estimate of $620 million. This was led by an increase in unit and parts sales in the American region. Price increase also favored revenue growth, partly offset by unfavorable foreign currency movements.

Revenues grew 14% year over year to $433 million in America, driven by favorable effect of unit price increase, rise in shipments and increase in parts sale. However, sales in Europe remained flat at $171 million due to fewer shipments. Revenues in the Asia-Pacific region were $55 million, down from $52.3 million in the year-ago quarter.

Cost of sales was $545 million in the second quarter compared with $505 million in the year-ago quarter. Gross profit increased 17.9% year over year to $114 million. Consequently, gross margin expanded 120 basis points (bps) to 17.3% in the quarter.

Selling, general and administrative expenses increased 8% year over year to $78 million. Operating profit in the reported quarter grew 45.9% to $36 million. Operating margin also expanded 130 bps to 5.4% in the quarter.


Worldwide backlog was around 29,300 units as of Jun 30, 2013 compared with 24,200 units as of Jun 30, 2012. In the second quarter of 2013, worldwide new unit shipments were 20,900 units compared with 18,700 units in the second quarter of 2012.

Financial Update

Hyster-Yale ended the quarter with cash of $162.7 million and debt of $134.8 million. Cash flow from operating activities in the first half of 2013 was $40 million compared with $53 million in the prior-year comparable period.


Hyster-Yale expects the global market to grow moderately in 2013, led by Brazil and Latin America and as well as continuing recovery in North America, modest growth in Asia-Pacific, the Middle East and Africa. However, the company anticipates the European scenario to worsen due to volatility in macroeconomic conditions.

Hyster-Yale therefore anticipates an overall increase in shipments and parts volumes in all markets in 2013. However, material costs are expected to remain flat.

Operating profit for the second half of 2013 is expected to be down compared to that of 2012 as marketing and employee-related costs are expected to rise, which will result in increased operating expenses. Net income in 2013 is expected to fall in comparison to 2012. The company anticipates an increase in capital expenditures in 2013, largely due to building a new plant and information technology improvement in Brazil.

Cleveland, Ohio-based Hyster-Yale, designs, engineers, manufactures, sells and services a comprehensive line of lift trucks and aftermarket parts. Hyster-Yale currently retains a Zacks Rank #1 (Strong Buy). Other stocks worth considering in the industrial products sector are Gorman-Rupp Co. (GRC) and EnPro Industries, Inc. (NPO) with a Zacks Rank #1 (Strong Buy).

Peer Performance

Key Technology, Inc.’s (KTEC) third-quarter earnings increased more than fourfold to 23 cents per share from 5 cents in the year-ago quarter. Reported earnings also surpassed the Zacks Consensus Estimate of 21 cents.

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