HY - Earnings call transcript Q2 2018 | Hyster-Yale Materials Handling, Inc.

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Operator

Good morning. My name is Rod and I will be your conference operator today. At this time, I would like to welcome everyone to the Hyster-Yale Materials Handling Second Quarter Earnings Analyst Call. [Operator Instructions] Thank you. Ms. begin may you Kmetko, your conference. Christina

Christina Kmetko

Good second quarter you. responsible Investor morning, Kmetko everyone, XXXX our for Hyster-Yale. at to welcome Relations earnings I’m and and Thank call. Christina I’m

earnings of Al on me President Executive Colin Officer Chief today’s President are of and Hyster-Yale Joining our Rankin, Hyster-Yale Handling; quarter XX-Q. Financial Materials Senior Yesterday Group; evening, the second call and and Copies our our filed Chairman, Chief Chief Officer. and and Executive Wilson, Officer available XXXX President are and Vice published results website. Ken XX-Q on Schilling, release of we our

available results from is who conference approximately would during I to like webcast the if that anyone forward-looking statements session. here call, our be certain XX an to listen version also that to this These statements. remind not contain For are and may to at these number may will or today’s could subject later remarks entire risks forward-looking updated which conference in disclaim our be any prepared until a We today not in for differ statements, able made those to to cause forward-looking following website call on months. this of quarterly our and statements everyone archived afternoon of the update expressed either uncertainties actual next obligation materially all. question-and-answer call, this

website. amounts this set are are uncertainties these earnings in Also and and information earnings non-GAAP was amounts our forth on and certain available our The in reconciliations considered regarding call risks these our release during Additional XX-Q. in included our non-GAAP. of discussed release

highlights bookings our truck a our will year. then quarter activities. increased remains shipments I had and first lift into lift XX% strong second over details. global in ending second prior quarter solid our and results Now the market market increase let strong we quarter discuss discuss the truck second In and and this me backlog the the get and the in

average We increased $XXX.X trucks. last unit which $XXX.X was On booked priced products result to year X also year. from revenues within decrease in revenues decline million driven noted Despite lower our with line million in in the to consolidated last of more our mix up XX% million We operating backlog. our business experienced a increase of that these Bolzoni’s fewer from business XX% and as This value portion XX% Class this by in a priced units dollars. backlog our million attributable a decreased operating $XX.X translation large result of over higher the increase were lift and revenues. of the increase XX% $XX.X solely basis, truck broadly truck a increases a in growth the the U.S. our in the was revenue be sales Bolzoni and profit. a It should consolidated of expectations significant lift to EMEA an profit

XXXX. second Maximal transaction $X.XX $X.X prior the million $XXX,XXX June completed unfavorable our Our should and the $X.XX or recorded we million unplanned both We $XX.X settlement investment on were quarter. share a that reported of pension share million income with adjustment equity compared $X.X results mark-to-market consolidated in an highlight an in and adjustment per segment. include net this quarter also which year of on unfavorable per X, also Americas I

loss million one we JAPIC results result, for a own of the Maximal. of month the quarter $XXX,XXX revenues net the the and include As segment second $X.X

In for million Maximal segment our pre-tax reported income well costs and our amounts as in from business, respectively In $XXX.X prior cost. $X.X of of expense Americas went addition, second XX% as $XXX.X XXXX tax revenues quarter higher XXXX our the XXXX lift year. and non-deductible in net $XXX,XXX also up which includes million related truck second million acquisition quarter both related in acquisition million accumulated to $X.X were consolidated XXXX to

the XX.X% $XX.X year million but higher comparable our foreign higher Those increases, to our currency - lift the geographic other movements prior material operating quarter truck and compared Our as more significant are incurred offset last factors manufacturing results. material higher and benefits profit support well with were shipments decreased than EMEA parts operating million costs gross price strategic in marketing revenues profit initiative. $XX.X in higher Overall and by as generally expenses year. affecting and segments, in was all to from the favorable operating and to

for me consolidated let truck business. the Now turn to lift outlook the

to continue remainder and of volumes years XXXX, our the over market unit key on initiative. the focused continued future in We implementation share be strategic and of increasing through our

gain. our our XXXX. of only This reasons half but main marketing specific sales our XXXX the have year. of in the is global increased the strategies compared with half half execute second we modestly first year marketing realigned the remains of in have market in sales We half and share and the it second truck expect industry both sustainable strong overall increased The one operating and target half the the effectively of our the first lift to to of teams grow resources as it to and first expenses means more

half and unit second same during the and parts period. XXXX the shipments year revenues unit to full year and with increase prior expect We compared

the lift improvements a second truck with We half more increase offset the the to fourth expected of profit the third in year operating quarter. be decrease the in quarter to modest by anticipate in also than

anticipate in during improvements tax is profit in XXXX adjustments XXXX an our such, in will the increase full Nevertheless half the is first substantially in the expect we Tax We this decrease expected operating moderate of made as income not with for result of operating the a driven of over XXXX half decrease the the second second last quarter half to third last reduced by in the U.S. in and net the compared absence the primarily expected Reform to Legislation. year mentioned are partially continue as offset result expect to overall a help profit including offset section year. year's However, of half inflation year I recover to the by shipments and were that implement in higher expenses increases quarter are inflation material product an needed. of pricing actions fourth at booked We be are in price as the These implemented by to expected material prior booked to being at shipped. and result increases anticipated and cost anticipated improvements The cost increase trucks implemented. to prices we new improvements prices impacts pricing of price backlog the operating effect expected tariff XXX previously. as the are higher the orders second

most number of to impact future their We are interpret affect. to reviewing of on operating working minimize at the And are our recent full tariffs XXX the strategies we Section still a same results. likely the time

to by Moving with Bolzoni primarily driven reported year EMEA. of million net in $XXX,XXX of second in revenues in in loss second million was million sales Bolzoni, of $XX.X $XX.X $X.X XXXX of net revenue revenues compared Bolzoni’s of higher the a volumes increase income quarter for quarter. last

unfavorable Bolzoni’s translation revenues absence In the of gross as net higher $X.X of $X.X operating increase in dollars. income expenses. operating partially increased result was as movements million of the profit prior addition currency currency U.S. result profit This to million. due including Bolzoni of and of year increased the the a in movements sales offset by in favorable improvement an a

second we Bolzoni’s as quarter. implementation forward the of in half growth expect of EMEA enhancement increase sales Looking the anticipated third and revenues the a program, second of to the continued result in half primarily Americas the with XXXX market compared in

the the at first lower revenues year is half the than in in However, of improvement half of the the in to level expected be a second year.

the anticipate several for from the full revenues sales operating increase substantial to remainder the year and well anticipated strategic addition net profit as of XXXX generate for of the to leverage XXXX expected growth the and period. In in programs as we respective year operating continued the the the growth, with key Bolzoni’s in income compared resulting implementation

cost units increase offset remainder has second a the operating XXXX base the lower of mainly in purchases due a both loss was Nuvera’s to the of later of as end year second first result Nuvera’s implemented Nuvera’s effective Shipments an to further on expect an loss $X.X of its of the decreased at quarter. the in net improved million reported of increased year operating a cost U.S. to net $XX tariffs and reductions a Nuvera income imported been million the to and first end components. development compared pre-tax Nuvera recently battery and to with leverage segment, on of year. of tax a Reform half XXXX and over substantial increase the due loss prior battery to result cost $XX.X Nuvera demand tax we in as million our to compared operating million designs rate in expects expects $X.X will quarter to second continue generate higher Finally, of of loss of The $X.X expects XX second Legislation. Nuvera Nuvera But with core its deferred at partially volume backlog revenue continue primarily the in the units XXXX throughout Tax box and quarter as – on realizing net loss increased on its quarter battery reductions. these XXXX year. benefit future replacement to box with prior shipments continue these the just a replacements through this components compared the unit a to the until supply in half in ago. Nuvera period. lower million box replacements chain smaller result XXX XX shipped of reductions the year of a decrease although Nuvera loss the of quarter ago. losses loss product of quarter and costs.

out replacements find We closely with truck business. components. working expected battery sourcing transferred the to of to suppliers box lift and Production affected at phased to for alternative Billerica Nuvera’s be facility is down are

the fuel will and in manufacture stacks cell phase battery and marketing With the focus of out engine. design, and replacement sales of Billerica, box production Nuvera on

transit this credit. they interest In demand call in agreement believe and growth in profitable manufacture stacks in cell for new vehicle engines, engines applications manufacture engines, significant we by third battery market. this provides fuel the energy could This of we were for addition in in the cell particularly Nuvera next for Early and GenX delivery fuel other experiencing Orion to integrated be fuel outside China Nuvera's the federal by for and box the product use of for vehicles fuel years. used expected designed truck said is opportunity. and on and significant cell The engines its XXXX, quarter stack, to platforms. Nuvera agreement based exclusive are a fuel growing reinforced cell of three in license - kilowatt recently tax sale lift buses, Chinese motive China in extended assemble to units be the market XX over replacements, finalizing

throughout Billerica anticipated the three-year facility technology in In and with significantly the at increasing The agreement exclusively China Nuvera. timeframe. addition volume to agreement also initial manufacturing services by testing XXX engine in a will contract. be engines the royalty purchases these cell cell minimum used the stacks revenue fuel manufacturing annual provides minimum successful Nuvera, of purchase stacks to fuel term after with of initially fuel license, XXXX-XXXX the cell of manufactured localized in incorporates in the engines The its

decrease achieve to loss substantially compared achieved although half sales the second by target sales for The XXXX. second Nuvera especially trucks, the operating on cell-powered expected engine half earlier as quarter, year, could target as with current in late in to of moderate XXXX more for lift We’re later be fuel markets. fourth of depending other the and last over volumes is or well break-even this XXXX,

to be net half effective While lower full-year as is be a XXXX a expected operating income to lower Nuvera's XXXX realized loss than the be full the improvements to a in smaller to comparable tax due rate. to expected expected is loss the is losses on result year of last benefit because of XXXX second tax the year,

operating lift profit a increase the a to profit a and in in lower our in are full year, to operating full offset outlook truck offset substantial a lift profit So decrease our first due summarize in modest and Nuvera operating Bolzoni consolidated improvements year by we principally expected at to the expected the expect loss in fourth partially operating operating quarter. consolidated in quarter profit in by increase the the the half modest XXXX, due profit. its in third be truck of combined business the XXXX lower improvement decline These to for mostly quarter, to operating with fourth

increase net XXXX income legislation. is result million Our the $XX.X made consolidated substantially net reform adjustments expected in tax of the absence of due tax to U.S. a to of as

Before we for open about position call and I comment questions, cash wanted our cash up to the make flow a expectation.

June position of at compared $XXX.X at $XXX.X the cash XX, Our million million end XXXX. with was

from million Our $XXX.X million year debt balance $XXX.X end. down was at

second an experienced in last the in XXXX and year, favorable higher of cash XXXX, result and prepared levels of the working the excluding expect payments cash of from decrease effect to we capital, and payments of June first a acceleration now will unplanned financing I cash primarily payable remarks. for capital the your our the increased questions. restoration of expenditures. anticipated As year both That quarter HY in due concludes higher up to had consolidated before than paid flow December the full XXXX our excluding these open accounts normal compared we to Maximal on activities XXXX call in half significantly for benefits

Operator

from of Shlisky line Mike [Operator the your question Global. first Seaport Instructions] And comes from

is line Your open.

Mike Shlisky

the start or improvement here, overview a do be the at to of in get ticked when pricing basically but the things know from this combined of you backlog I an should broad the lift profit up - very I slightly last the than quarter want in operating feel wanted better in a mentioned segments you've I there So trucks? because last all year about with full you year, three got to some down the Hyster, you quarter if look

Al Rankin

a nobody The the ago. of point period perhaps months is is with to that I'd challenge difficult they're increases make hard negotiating very comment that or view. is is a It's That's one. price three uncertainty more a there from this of the than happen tariffs question including tariffs was answer sure the about or the is a of what's increases point impact it's really subjective very –and now is difficult balancing quite case view only a going there to environment, permanent cost of a

the that's I would So only comment add.

Mike Shlisky

worried effective original your a for follow-up with change if as about is And should brand can question to that be don't then on as Maximal perhaps to there forward? perspective, a from how Maximal, tariff things the you anything were we what going be plans

Al Rankin

around not really Maximal the is issue, that very for other affected Asia but little U.S. utility there's Maximal China, products produces and by segments appropriate tariff world that are markets the markets particularly in the of affects

So play. really the come don't into tariffs

Mike Shlisky

more kind you've controlling are on been allowed first perhaps cetera. what and see of Maximal on there the the then as behind actually go your et And to it, and books, share of impressions now curtain you're the and broadly

you from If now at you distance? than think just looking did of kind do that own it differently it now, a you you

Al Rankin

the for detailed is period. extraordinarily behind diligence due we've you, XX curtain tell been me This Let months.

know focus you signed documents at that of we'll the time that that documents complete stake complete We that business they ago came supply say now due the know well business in ours. lawyers Maximal aligned joint involved huge had very was information addition don't We outsiders success efforts. complex still substantial and fact on are in XX%. period technology, have and the own owners their this product We've crawling would it of people very out diligence of manufacturing, the down accountants, in really so ways in are and learned teams have have the including recent see in all marketing. in and and have acquisition. nothing to our some set in I forget we all the our chain, to new They and the disclosure professional, interests with that the was months time some you advisors, for had most effort have a this as very We the a those and whole teams much and own hammering since there then details as of been development, sales of over part.

not a this from where to of view. former They're it's and owners gone. the entire our point the integral situation transaction important and So are very managers

Mike Shlisky

Just guess you for squeezing due could XX%, one up here. being it’s tell backlog last what one Ken I percent is currency? The us to

Ken Schilling

predominantly Mike let that the say on that know in have get but is I analysis, the the back one. backlog don't backlog would me I that U.S. handy in you

So would only I say to XX% about XX%.

Al Rankin

I really it very to of look units the up that's that. I'd at backlogs at point unit the key do revenue. look substantially are and wouldn't view way of the from the and

the that generally I X X trucks the favor. a call perspective compared Class XX,XXX I to think trucks type world-wide was the been that is think and to think would it mix a in on Class to we that’s backlog value March trucks and for out at ago has and give approach earnings is including XX,XXX I our the year release have the from say it you XX. big in I of a the with way flavor larger currency the changing during That smaller XX,XXX and units at approximately

think gives in healthy look in our with disruptive units an at manage and bookings, tied of and terms to orderly a we have shipment think our in any way in be productivity moderate robust indication can it’s I perspective as our manufacturing in cycles the not us very it plans of changes backlog shipments So forward. suppliers all in our it an that I and and we volume a

Al Rankin

question into we've know fourth earlier outlook the quarter is some now. compared the this three more months how forecast about we're booking and you at solid feel to been for to about the booking certainly because back prices higher well coming time maybe we ago, And do

have So as to and as what look expect the the the pretty quarter good at we into quarter we visibility we third be. fourth to results

Ken Schilling

I plus currency have as our is precise said Mike where dollar. the in units of Americas, are And an the our U.S.

would effect. only XX% have that really So

Operator

your Sidoti next Company. And the question & from of from line comes Joseph Mondillo

open. is line Your

Joseph Mondillo

you over And my have understand to I'm or pretty quarters. of just the a try trying into good couple get you business better, next sense to first the visibility question, said

the were And couple segment, we this in the of trying margins we're in at that just of sense first the material Could but I'm price given margins the you best you the know you mix instating a just in know know the margin know the margins. range So, headwinds you very up sort understand it's op get of with make of increases of you're time. help Op looking to me get ago the a you long a years X% of you the Americas at half X%, fully op know that Americas been the if you the segment? in that at year inflation can and think sounds where you

Al Rankin

of your don't make dimensionally is of kinds but forecasts, think reasonable. those situation really understanding the We I

to situation for prices emerged don't thing booked. and is emerged backlogs produced has it months they are tariff at that several the of understand action that that important increase to trucks now. with especially The booked has and and are get where are But levels trucks being those as over taken being we've time,

resulting we pricing ago tariffs. the between months mismatch some that levels book a our from getting assumptions cost you're when and the are for So the trucks material

we dealing to bookings as some still we're think way earlier the our the the third have the tariff quarter through increases. through in working quarter comes of impact but inflationary when in with not of suggested numbers biggest that fourth the the that And work So I impact Christy

the and increases those of times. another earlier you’ve I comment of newspaper cover that'll very out Trump XX% that with this why uncertain that is tariffs very the price these in round impact ability the on circumstances. this made tariff about instead read my of considerably the in to even happens morning, regard the tariffs, outlook tariffs XX% is of Administration the to if So And are thinking change

don't issues. started other Now somehow negotiating it impact happens. if on the could what all together two the the depends we agree view and anyone U.S. countries than of on expected that and negotiating. they're the would tariffs and to U.S. politics they I try it so on and With regard less resolution reach and be hand, to differences think down on get tariff think discussions all these EU off to of the held the of sit and point

likely was So I regard with wish I to could to say what happen China.

point protection table. related, an we from capacity issues these that – we're closely it’s can that most have think that tariffs – deal the and and to are the with In issues that that affect we to possibly the with environment just and But it effectively closely is intellectual our view, not are like things related property on markets. particularly, have affecting as not this – and environment would we China other I an that there of of sort can. that the to that dealing global steel is we of respond as are to try

things of the long for because in carefully at and the to if magnitude is companies this a period add-on on of the business. we of impact going on to its time unpredictability enough tariffs having very charges goes this of look terms for are One have wonder

So uncertain times.

Ken Schilling

we the our have. Al's we our Mike, period balance that. aluminum course, quarter volume traditionally. quarter But our fourth strong into is a taking us predominantly tariffs have quarter for us. think a normally Al you that third fourth third the bite we move lag quarter sorry, out our about somewhat as And us also is still of get quarter, seasonal I’m – out fourth as start to you shutdowns of and helps we about price Joe, and to When thing steel the described that forecasting that comments quarter think obviously that we're from

the think that harder calibrate. you that's So the Chinese piece that's play. Al’s kind pieces of describing that component uncertainty here, how can about you to side, When that's has the components put into those

Al Rankin

devalued so something a as has is months you an Chinese of know by of the in noted, last many the there amount that’s currency probably couple significant You factors offset.

Assuming are in they negotiated that there are so in so currency, the number of things. and are dollars prices a local

I looking will variety to on tariffs are think of say we’d the try time. that moderate of assumption at the with the other we they be us for is of that measures a thing a to that impact period

So we're actively impact looking of than other at those price the through mitigating increases. means

Joseph Mondillo

Can I another way. try asking it

trying obviously product, prices on I'm as So focus as mean between prices I to and well output spread input the of… so in terms

Ken Schilling

we more a think forecast. you said. can what don't not we're we've get I give to – any It's visibility just than going detailed into

given I where comments. pause and think we've you kind that's of in to the going our drivers about we're

Operator

line [Operator Shlisky the question of Instructions] from Your Seaport Global. next Mike from comes

Your line open. is

Mike Shlisky

I next of potential give news first any guess over alternative of deal pursue bit you some guess or on this wanted can needs also is of Europe, non-lift if years. the solutions us whether you looking I’m of you And get touch kind Hyster for in seen sizing what haven't potential Nuvera truck I – some much great kind where of I apparently China your fuel in market a on applications. for us kind curious, to on products why the couple now. on-highway tell as also sense the U.S. into I'm curious the that to little road. to applications

Al Rankin

pollution different traditional the a energy there the that vehicles serious are tremendous that that are can In need types in plants of of country China, are energy new of and country. are which used. used. think, last of vary of power to types terms address sources pace answer I And problems first, in mobile adopted, for both terms at the sources to to question the from that your

equipment some of the that that these vehicle project concerned our for and with in automobiles similar have is pace, to going to in that to expanding vehicles. the adoption technology heavy that buses you change, our is particularly will others. where impact of measured it’s vehicles be these to more commitment couple expect trucks market very use in say to environment significantly the Chinese rate, Europe be will far the as markets at government change, centralization we in the rapid us the type particularly buses of forklift of of because they world drive a and United and would going engine and and and so it. expect larger the expectations that very China, are is in and we from in a an China, quickly be very engine responding a the you China’s type part the going opportunity non-forklift market to in like other California to the I using vehicles to as and that on our I significant the and companies States in larger grow and in making applications that change demonstration quickly simply – truck You other the opportunity government's are desire leader used efforts as at and we're that the in have is our rapidly don't slower in driving that and for know we provide

productivity I all sense So the applications the the that focus quite the not of of ownership. note cost It's and improve in achieve it's users fuel in truck forklift and that heavy can lowest forklift trucks just then different our focused duty those the the business on cells where in help of truck forklift applications, comprehensive use is across applications.

emerging to opportunity and China selective objectives is which market very what's in responsive pressures. to a as So opposed it's much and government a driven those of kinds

Mike Shlisky

already little I engines, concern makers well any major of pursuing course. serve they is anyone take larger big take other there capacity global fuel have players kind that exposure, kind road there bit of step could broaden power global if of likely of your know they market? risk secondly, stuff push engine engine one, some guess the further, transfer are is the will question just China is a whether that most some where behind And you to any kind from if are to are of technology China a you to then are in And also that and there that But cell in on there?

Al Rankin

first potential the different in variety that question customers all think work with your in to I answer customers. - is China a of we our and of

We property that and and good in We are is ensuring appropriate to our a we're are on believe we're being using position extremely that approaches intellectual that focused protective. the do protected.

the Secondly have because the importantly of interest technology we and has. of broadly perhaps features some even of more that is technology particular our

vehicle us on the we to think may have we in automobile markets over time. addition fruit including efforts extensive bear other heavier also the that market for in so And market going

Colin Wilson

should agreement as say and you by stock mean IP we've component. so be which be why significant of will signed the core know engine the engine will we keeping really the is providing our really control it the I I but most designed we're of manufacture the our this IP is, also protecting

Mike Shlisky

the stack will you the own tariffs engine facility once have And be from your there? into exempt going China,

Colin Wilson

me, your Excuse question? what was

Al Rankin

are in tariffs going - because from no tariffs. there Exempt

Colin Wilson

tariffs. There are no

can market in manufacturing area including activities to mass it add of enhanced Hangzhou any would we supplier development, now access control in And the that to have development market. our addition, manufacturing by allow of do are particularly Maximal to a do to in critical acquisition, our in emerging the group China of truck that which best lift people off ability and will the light that back our end, we in in In China. customers own the significantly we product But Maximal. expect operations to the facilities us will that be have we'll that possible the now have we

Mike Shlisky

fuel the purchase and for one if of it's fatal was toward reasons one kind lift a lift stuff was any was of add I accident I’m important. that at truck, cell, multinationals There multinational, changed a the me power someone some got in – last was in course. of big power wondering two just the the had of there attitude’s quarter I if to on somewhat of just month sorry that. last the that like kind you've offering or cell safety truck a from sense Nuvera. But as and a big the And end some over one who of accident of yours, major fuel not was over kind the

Al Rankin

the been accident knowledgeable Colin? we least characteristics will Colin but our ask or are which aware customers are that, raise some about comment not on we’ve highly minds introductory that very of at of has the the in with. comment the it has is that concerns working I’ll we most closely expectation with it to and

Colin Wilson

analysis want awareness As on them to because that Al still but are caused is prevalent that we ongoing, comment investigation trucks. conditions of said, our don't the accident is I not we mean in obviously the our have the conditions the

design different we So characteristics. have

we but in As and lose and the as reaction is that alive a the few far the marketplace of prospects discussions bank were ongoing. we did still working the prospect are concerned, on, bulk active is

Operator

some over closing And our turn to there questions presenters time. call for at are no I remarks. the further back will this

Christina Kmetko

comments? Thank any closing you, Do everybody. you have

Al Rankin

No comments, no. closing

Christina Kmetko

All joining right. today. much Thank for very us you

Operator

And available to Eastern be It concludes may ID enter playback XX:XX today's XXXXXXX. at conference August conference, a your number call. until XXX-XXX-XXXX listen will call today's and conference PM This X, you of Time. to XXXX

may disconnect. You now

Hyster-Yale Materials Handling (HY) 1 Aug 182018 Q2 Earnings call transcript