Hyster-Yale Materials Handling, Inc. (NYSE:HY) Q4 2025 Earnings Call Transcript

Hyster-Yale Materials Handling, Inc. (NYSE:HY) Q4 2025 Earnings Call Transcript March 4, 2026

Operator: Good day, and welcome to the Hyster-Yale Materials Handling, Inc. Fourth Quarter and Full Year 2025 Earnings Call. All participants will be in a listen-only mode. To ask a question, you may press star then 1 on your touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Ms. Andrea Saba. Please go ahead, ma’am.

Andrea Saba: Good morning, and thank you for joining us for Hyster-Yale Materials Handling, Inc.’s Fourth Quarter and Full Year 2025 Earnings Call. I am Andrea Saba, Director of Investor Relations and Treasury. Joining me today are Alfred Marshall Rankin, Executive Chairman, and Rajiv K. Prasad, President and Chief Executive Officer. Yesterday, we filed our fourth quarter 2025 earnings release, which provides a comprehensive overview of our financial results and performance. The discussion in this script serves as a supplement to the earnings release, offering additional insights and context for our results. You can find the release and a replay of this webcast on the Hyster-Yale Materials Handling, Inc. website. The replay will remain available for approximately 12 months.

Today’s call contains forward-looking statements subject to risks that could cause actual results to differ from those expressed or implied. These risks are outlined in our earnings release and SEC filings. We will be discussing adjusted results, which we believe are useful supplements to GAAP financial measures. Reconciliations of adjusted results to the most directly comparable GAAP measures are available in our earnings release and investor presentation. First, I will start with a brief overview of our fourth quarter and full year results before turning the call over to Rajiv to discuss the business environment and strategic outlook. During the fourth quarter, we saw several encouraging signs. Bookings in the fourth quarter strengthened significantly, increasing 42% sequentially and 35% year over year, which may signal the early stages of a demand recovery following an extended period of customer caution.

Also, the first two months of 2026 continued this trend. Fourth quarter operating cash flow increased to $57 million, driven by meaningful improvements in inventory efficiency. We continue to make progress aligning production with demand, improving finished goods management, and reducing inventory levels, all of which support stronger cash generation. That said, market conditions remained challenging during the quarter. Fourth quarter revenues declined to $923 million, reflecting weaker shipment volumes across the business as customers continue to delay purchases until they have a clear need for new trucks. Tariffs remain a significant headwind, reducing both quarterly and full year revenue and operating profit. In the fourth quarter, the impact of tariffs, combined with lower volumes, resulted in an adjusted operating loss of $16 million.

This includes $40 million in gross tariff costs. Looking at full year 2025, revenue declined to $3.8 billion and we reported full year adjusted operating profit of $16 million. This result includes approximately $100 million in gross tariff costs, underscoring the magnitude of the ongoing external pressure on our results. While 2025 reflected a difficult operating environment, our improved bookings, strong cash flow performance, and disciplined cost and inventory management position us well as demand begins to recover. With that foundation in place, I will now turn the call over to Rajiv.

Rajiv K. Prasad: Alright. Thanks, Andrea, and good morning, everyone. I will start by sharing how we see the current economic landscape unfolding, how those dynamics are shaping customer behavior, and how we are positioning the company in response. After that, I will walk through our expectations for 2026, before turning over the call to Al for his closing remarks. The global lift truck market remained challenged in the fourth quarter, with year-over-year declines across all regions and truck classes. However, despite that broad pressure, we began to see an important divergence emerge late in the year. North America showed meaningful sequential improvement relative to quarter three. This uptick translated into stronger bookings and a noticeable improvement in customer engagement, as an encouraging contrast to EMEA and JAPIC, where demand contracted sequentially as customers remained cautious amid macro uncertainty.

This brings me to the underlying customer mindset. Across all regions, customers are still heavily focused on cash preservation, higher financing costs, and fleet utilization. As a result, many continue to defer capital spending, especially for higher-duty equipment. This has suppressed ordering activity outside of North America. Against this difficult backdrop, our quarter four booking performance stood out as a meaningful positive development. Bookings increased to $540 million, up significantly from $380 million in quarter three and $400 million in the prior year quarter. The Americas drove most of this increase, with particular strong traction in core counterbalance Class 5 trucks in the 1 to 3.5 ton range. Looking at the first two months of 2026, we have seen the positive booking momentum persist.

North America industry demand recovery is continuing, outperforming our expectations. The company’s own bookings are ahead of prior year, driven primarily by continued strength in our core counterbalance trucks and solid performance in the Americas. This reinforces our view that the underlying recovery is gaining traction as we enter 2026. But the more notable shift is why bookings have improved. Customers began converting quotes into firm orders at a materially higher rate, suggesting extended backlog delivery is now complete, greater clarity around their operational needs, rising urgency, and early signs that replacement cycles, which have been deferred, are starting to reengage. This shift, combined with the increasingly aged fleet and rising maintenance costs, supports our view that replacement-driven demand may be gaining momentum as we enter 2026.

Stepping back, it is important to underscore that 2025 was a difficult year after two very good years, one marked by high tariff costs, softer industry demand, and heightened customer caution. Many customers were still taking delivery of equipment ordered during long lead-time windows, stretching fleet lives, and delaying normal replacement cycles. We now believe many are nearing natural replacement timing. This is a key element behind our cautious optimism going into 2026. As we exited the year, backlog totaled $1.28 billion, reflecting shipments outpacing new orders, especially within EMEA, where recovery will have lagged due to delayed orders and industry shifting towards lighter-duty, lower-priced products. Sequential backlog decline was driven primarily by lower unit volumes partially offset by higher average selling prices tied to material and component costs.

Constant movement further reduced the translated value of backlogs. Now let me bridge that to what we are seeing in early 2026. Early-year bookings have been strong across all regions. Even though shipments began the year at lower levels than quarter four, if this trend continues—and we expect it will—bookings should begin to outpace shipments, allowing backlog to rebuild towards a more normalized three- to four-month level. This, in turn, supports more efficient production planning. Pulling these pieces together, we expect quarter one 2026 to mark the trough of the current cycle, primarily reflecting the lower order intake levels from earlier in 2025. As we move through the year, improving customer confidence, stronger bookings, and backlog building should allow production and shipments to expand gradually, with meaningfully stronger volumes expected in 2026.

Even as volumes trend upwards, near-term margin pressure is likely to persist. Here is why. The market continues shifting towards lighter-duty, lower-priced models. Competitive pricing, particularly from foreign manufacturers in Europe and South America, remains aggressive, and this has reduced shipments in traditionally higher-margin categories. Despite the challenging backdrop, our approach remains consistent, focused on what we can control, and on making disciplined, forward-looking investments that position the company for transformation which will accelerate when the market turns. Our priorities remain the same: rigorous working capital management, tight operational discipline, accelerated technology and product development, and continuous data-driven monitoring of leading indicators across customers and suppliers.

We have been through many market cycles, and that experience reinforces an important point: resilience and readiness matter. While we cannot control external forces, we can control how we operate. That is why we are concentrating on efficiency, productivity, innovation, and responsible cash management. To deliver on these priorities, we are executing transformation programs across several fronts. Product strategy. We have introduced new modular and scalable platforms to address these evolving segments. While these offerings strengthen our long-term competitive position, margins will remain pressured until they gain full market traction. Operational efficiency. We are streamlining operations, managing inventory more tightly, and improving working capital efficiency.

These actions help generate cash, even when revenues and profits are under pressure. Manufacturing flexibility. Our modular vehicle platforms allow us to build the same models in multiple regions. This flexibility helps us adapt quickly to tariff changes, logistic challenges, or supply chain disruptions. Customer engagement. We are strengthening our relationships with dealers and end customers. By listening closely and co-developing solutions, we are aligning our product roadmap with the real challenges customers are facing today. Product innovation. We are accelerating new product launches and introducing technologies that improve performance, lower total cost of ownership, and help us stand out in the market. Market readiness. We are watching leading indicators closely so we can scale quickly when conditions improve.

Our goal is to be a first mover as soon as demand begins to recover. Global optimization. We are aligning our manufacturing footprint and supply chain to improve cost competitiveness and responsiveness across all regions. These actions are helping us manage the current environment with agility and discipline. They are also strengthening our long-term structure, lowering our breakeven point, and improving product margins so earnings become more resilient over time. Our overarching goal is clear: Hyster-Yale Materials Handling, Inc. is the first mover when demand accelerates, enabled to scale quickly and capture profitable growth. To further support our long-term position, we have taken decisive action to lower our cost structure and strengthen resilience across market cycles, which include the VERA strategic realignment executed in 2025 that delivered $15 million of cost savings in 2025, and redeployed resources to higher-growth opportunities; a company-wide restructuring program launched in 2025 targeting $40 to $45 million of annualized savings beginning in 2026; and manufacturing footprint optimization initiatives that began in 2024 and are expected to deliver $20 to $30 million in benefit in 2027 with full annualized savings of $30 to $40 million by 2028.

In total, we expect recurring annualized savings of $85 to $100 million by 2028 compared to the beginning of 2025 before inflationary cost increases. I will now move to discuss tariffs, which remain a major external factor. We have outlined our assumptions regarding tariff costs in the earnings release, which were prior to the IEPA decision. With these assumptions, forecasted tariff costs are expected to remain broadly consistent with quarter four 2025 levels throughout 2026. While we have implemented pricing, sourcing, and cost initiatives, we do not expect to fully offset tariff impacts. Benefits from mitigation actions are expected to increase beginning in quarter two 2026, so year-over-year comparisons will remain unfavorable early in the year.

We are also monitoring recent legal developments related to tariffs. The Supreme Court’s ruling was limited to IEPA tariffs and did not invalidate other tariffs or address potential refunds, which, if required, would likely take years to resolve. Broader implications for trade policy remain uncertain, and additional tariff-related decisions will likely continue to be challenged in court. They could affect how certain tariffs are applied and how related costs or potential recoveries are recognized. These mitigation efforts should begin contributing more meaningfully in quarter two 2026, so early-year comparisons will remain unfavorable.

Andrea Saba: Bringing everything together, we remain cautiously optimistic.

Rajiv K. Prasad: Market conditions are still challenging, but improving bookings and aging fleets provide constructive signals, and volume recovery is expected in 2026. Based on these factors, for the full year, we expect moderate full-year operating profit, a small loss in the first half, followed by stronger revenue and profit improvement in the second half as volumes rise and cost actions take hold. As we move into 2026, the company remains committed to generating strong operating cash flow and allocating capital in ways that enhance long-term value. Management is executing targeted initiatives to improve working capital efficiency, with particular emphasis on aligning production and working capital practices with periods of reduced output.

We expect meaningful progress on these initiatives during 2026. As production levels increase later in the year, the focus will shift from conserving working capital to supporting growth, while maintaining the inventory and production disciplines established during the current downturn. Together with continued cost optimization, these actions are expected to drive solid cash flow from operations supported by improving net income. Investment in modular development and critical capital equipment and IT capabilities remains central to the company’s ongoing transformation, enabling advances in new product development, manufacturing efficiency, and information technology capabilities. Capital expenditures for 2026 are expected to range from $55 million to $75 million, with the final level dependent on the pace of production improvements.

Management will closely monitor spending throughout the year and may accelerate investment as production levels and market share improve as anticipated. As the company continues to generate cash, it will maintain its disciplined capital allocation framework, prioritizing debt reduction, pursuing strategic investments to support profitable long-term growth, and delivering sustainable shareholder returns. We have managed through cycles before, and we are confident in our ability to do so again by staying disciplined, strategic, and focused on long-term value creation. Now I will hand the call over to Al for his closing remarks. Thank you, Rajiv. As you have heard today, 2025 was a challenging year for our industry. Demand softened, tariffs were a significant headwind, and customers were understandably cautious.

Alfred Marshall Rankin: Especially since they were still receiving trucks ordered in earlier years. But it was also a year in which we took decisive actions to strengthen Hyster-Yale Materials Handling, Inc. for the next phase of the cycle. We have used this period to improve the business fundamentally, lowering our cost structure, increasing operational flexibility, sharpening our focus on cash generation, and investing in the products and capabilities that matter most to our customers. These actions are not short-term fixes. They are structural improvements that position us to perform better across cycles. Importantly, we are beginning to see early signs that the market is stabilizing. Things have improved. Customer engagement is increasing, and aging fleets are driving renewed focus on replacement.

While we remain realistic about the near-term environment, we are cautiously optimistic that 2026 represents a turning point, with stronger performance expected as the year progresses. Our priorities remain clear and unchanged: disciplined execution, proven capital allocation, and a relentless focus on the long-term value creation of our company. We are committed to maintaining financial flexibility, investing where we see durable returns, and positioning Hyster-Yale Materials Handling, Inc. to be a first mover as demand recovers. We have managed through many cycles over the years, and that experience gives us confidence, not complacency. We know success comes from preparation, discipline, and focus. Actions underway today are transforming our company by building more resiliency, higher profit, higher-margin growth, and a more competitive company.

We believe this will all translate into improved earnings power and stronger returns over time. That concludes our prepared remarks. We will now open for questions.

Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question for today will come from Chip Moore with Roth MKM. Please go ahead.

Q&A Session

Chip Moore: Hey, good morning. Thanks for taking the question.

Rajiv K. Prasad: Good morning, everybody.

Chip Moore: Wondering if you could perhaps expand on the pent-up demand dynamic and potential for fleets to get replaced. Just the conversations you are having, it sounds like things have continued to trend in the right direction here in 2026 so far. And any thoughts around mix and when we might see a bit of a shift to the more profitable list? Thanks.

Rajiv K. Prasad: Yeah, Chip. I think, as we talk to our customers, they are transitioning from conserving to really ensuring that they will have what they need for their operations. I would not say it is particularly euphoric. It is still about what must they do, and we are talking about predominantly industrial customers. So, certainly, as I look at our bookings, it is heavy on counterbalanced trucks. So I think that is the nature of it. I would say people are doing it despite their concerns because of the need, and it is mostly industrial customers who are coming back to us. We are also promoting that by launching some programs that will help them do it, so that has been a bit of a catalyst to further engage our customers.

Alfred Marshall Rankin: I think I would add just one thought to what Rajiv has said, and that is that the context here is that we have basically now delivered all of the long, high-backlog, early-order trucks. So the customers are now no longer receiving trucks, which they were, I think, Rajiv, just as recently as a month or two ago. So that dynamic changes, in a sense, the backdrop against which they are executing their own plans and thinking through what to do. So I think that is an important consideration.

Chip Moore: Yeah, definitely. Thanks, Al and Rajiv. That is helpful. If I could ask one more, maybe can you just update us on new product launches and the pipeline there and, particularly, anything around automation as well? Thanks.

Rajiv K. Prasad: Sure. So I think from a new product launch point of view, in fact, just this week, we are launching some new products to our customers. It is really part of our modular and scalable spreading of that platform into our electric counterbalance trucks and also starting to be implemented in some of our warehouse products. So these launches are being introduced to our dealers in the early part of the month, and they will be available for sale by the end of the month so they can go out and take orders. In terms of the automation solution, we have been working with what we would call friendly customers to install the automation as part of a pilot. Those have gone very well. We have started to get orders for the automated trucks, and then we are also now engaging some of our dealers into the selling process of these automated trucks.

So I would say that will accelerate throughout the year. The actual official launch of the automated IDA truck is in April. So it is coming very soon.

Chip Moore: Okay. Thanks very much. I will hop back in queue.

Andrea Saba: Okay. Thanks.

Operator: The next question will come from Ted Jackson with Northland Securities. Please go ahead.

Ted Jackson: Thanks. Good morning. Good morning, guys. So first, I just want to summarize what I am hearing from you all just to make sure I am getting the message. I am a little slow today. So in the fourth quarter, bookings picked up, driven by North America industrial counterbalance. Outside of North America, bookings did not pick up. They were somewhat stable, but what you are seeing there is a shift towards smaller, more price-competitive product. Going into 2026, bookings continued to strengthen not just in North America, but also seem to be spreading to the rest of the world, although the rest of the world is still seeing smaller, more price-competitive product in terms of what is being booked. You expect your bookings to continue to strengthen as you roll through 2026 as you go through really a replacement cycle.

But the mix of your bookings will be towards these smaller, more price-competitive products, which means that although I would expect to see a margin recovery, we will not see a full-blown margin recovery. So is that what I am hearing from all of the dialogue in the press release? And then behind that, if it is correct, then does it mean that it should be as we exit 2026 that we would see your margins move—gross margin—more to the mid-teens into the high-teens? That is my first question.

Rajiv K. Prasad: Yeah. So I think that is directionally very correct, Ted. In terms of the margin levels, the 2023–2024 margin levels were out of the ordinary for us. We saw something in the low twenties. I do not think we will see that. We will see, depending on the product line, in that range between mid-teens to high-teens, which is where our targets are. So, yeah, I think that basically everything is normalizing. Our backlog is normalizing. Our margins are normalizing. The one thing that is happening in the market—and we kind of predicted it—is that there is a trend towards lower capability trucks because that is what the customer needs. And so those are going to be the primary path forward. Well, that was the whole point behind the effort to put the products out anyway.

So you are absolutely positioned for it. But it is fair to expect, if this scenario plays out, that by the time we get out of 2026, your gross margins should be somewhere in the mid- to high-teens.

Ted Jackson: If indeed we are seeing we are at the bottom of the cycle.

Rajiv K. Prasad: I think that would be a fair estimate.

Ted Jackson: Okay. And then I have a question just on CapEx. I thought that the CapEx guide was—at least the midpoint of it—would have been a little higher than I expected. Can you talk a bit about the thought process within your spend and where you are going with it and why you are ramping it up that much?

Rajiv K. Prasad: Yeah. The vast majority of the CapEx is going into really three areas. It continues to be towards product. We continue to scale out the modular, scalable, and our technology solutions now, including automation and lithium-ion batteries and chargers that go with it. The second area is around really upgrading our IT infrastructure. Especially over the coming year, we are going to launch a new CRM system. We are going to really upgrade our data product lifecycle management system, and the parts business will move to a new ERP system. So that is quite a lot of IT-type programs that we are implementing in 2026 and in 2027. And then the last area is optimizing our manufacturing footprint. What that means is we are moving some production globally and putting additional capabilities in geographies that did not have it.

So it gives us a full ability to source any type of truck from anywhere to anywhere. And I think, as we discussed in the past, the modular scalable platform was designed to be able to do that, but it does take some capital to spread that capability. The other thing we are doing in our operations is adding more automation—much more automation in the way we manufacture our lift trucks.

Ted Jackson: Okay. Those are all worthy investments. And then my last question, just a little more in terms of markets and stuff. How about a little update on the efforts and the progress for the company in terms of penetrating the warehouse segment—the goal of taking some market share there? Can you give us some kind of color on what is going on? That is my last one. Thanks.

Rajiv K. Prasad: Yeah. We have made some progress in that area, especially in North America. Our share has improved in the warehouse market. I think the big enablers and accelerators will continue to be some of the new trucks we are launching. We are in the middle of launching a new three-wheel stand, which is going to come with a lot of scalability and address parts of the market we have not been successful in in the past. We will continue to add our safety systems, such as our AI camera and our DSS system. This is to make sure to avoid pedestrian incidents and keep the operator operating in the right stability range, and then our automation solution and the energy solutions are all very targeted towards the warehouse segment of the market.

So we think those will help customers and provide us an opportunity to discuss these solutions with customers we have not had a close relationship with in the past. And, in fact, a lot of that is going on as we speak. Okay. Well, thanks very much for the questions. We will talk to you soon.

Andrea Saba: Thanks, guys.

Operator: The next question will come from Kurt Lutke with Imperial Capital. Please go ahead.

Kurt Lutke: Hello, everyone. Thank you. Thank you for the call. With respect to the order rates in the Americas, the pickup is very encouraging. Can you give us a sense for how orders trended by end market—directionally positive or negative—autos, e-commerce, that type of thing?

Rajiv K. Prasad: Yeah. Typically, we do not break it down to industries, but I would say that a lot of the recovery has been in what I would term as industrials, and more on the heavy side. Generally, people who are manufacturing things—either equipment or capital goods like metals and paper and lumber, things like that. Hopefully, that gives you a feel. Obviously, that portion of the market were the ones most concerned about some of the things we got into in 2025, whether that was tariffs, and along with tariffs, the confidence in what is going to happen globally in these industrial materials and solutions. I think that has been the case. In the warehouse side of the business, it pretty much stayed steady—maybe a little bit of a dip, but nothing like the industrial side.

Kurt Lutke: That is helpful. Thank you. You have mentioned automation a couple times. Sounds like maybe it is still early days, but can you give us a sense for how the shift toward autonomous and lithium-ion will impact the margins and to what extent?

Rajiv K. Prasad: Yeah. I think both. The revenue will be higher because, typically, in the past, we have generally sold trucks without—even electric trucks without—batteries and lead-acid batteries. And certainly, when we sell internal combustion engine trucks, they have an engine but no fuel—we do not provide that. Whereas when we implement a lithium-ion solution, we provide a smart energy system. Now you need to put electricity in it to make it work, but the battery comes from us, and then the charger—because it is an intelligent charger—comes from us as well. So it is quite a bump in revenue. Now, for automation, there is a much larger bump in revenue because there are very high-capability sensors, software, and actuation systems in those trucks to automate them. So they are significantly higher, both from a revenue point of view and margin point of view.

Kurt Lutke: Interesting. Is it 2x in terms of revenue per unit? Is it that much?

Rajiv K. Prasad: Depends on the solution, but in that range, yeah.

Kurt Lutke: Got it. And what kind of margin—are the margins higher as well?

Rajiv K. Prasad: Yeah.

Kurt Lutke: And what percentage of your sales in the Americas would you say is autonomous? It is tiny, right?

Rajiv K. Prasad: Yeah. I mean, we are still in the pilot phase. It is tiny. But we expect that to grow over the next two or three years to become an important part of our business.

Kurt Lutke: Got it. Excellent. And then, lastly, a follow-up on tariffs. I know you have some flexibility as to where you assemble product. Have all those moves been made?

Rajiv K. Prasad: It is a constant juggle. As you saw, the Supreme Court really turned down the IEPA tariff that was having a big impact on where those products should be coming from. Now, the 122 tariffs have gone on, so that has had a bit of an impact on where we source from. But the key thing for us is that we have now the ability to do that. We have a forum within the company where we decide those—in fact, one of those meetings is straight after this call. So we are basically meeting monthly to make those calls, and the plants are being very responsive.

Kurt Lutke: Got it. I appreciate it. Thank you very much.

Operator: And this will conclude our question-and-answer session. I would like to turn the conference back over to Ms. Andrea Saba for any closing remarks. Please go ahead.

Andrea Saba: Thanks to the participants for your questions. We will now conclude our Q&A session. A replay of our call will be available online later today, and the transcript will be posted on the Hyster-Yale Materials Handling, Inc. website. If you have any follow-up questions, please feel free to reach out to me directly. My contact information is included in the press release. Thank you again for joining us today, and now I will turn the call back over to the Operator.

Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. A replay of today’s event will be available shortly after the call by dialing +1 (877) 344-7529 or +1 (412) 317-0088 using replay access code 10205863. Thank you for your participation. You may now disconnect.