HYSTER-YALE, INC. (HY)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue rose 5% sequentially to $956.6M but fell 18% YoY; EPS swung to a loss of $(0.79) as tariffs (~$10M headwind), lower volumes, and pricing mix compressed profitability; adjusted operating profit fell to $7.2M .
• Results vs consensus: revenue modest beat ($956.6M vs $936.9M), but large misses on EPS (−$0.79 vs +$0.60) and EBITDA (~$18M vs $35.3M); only two covering estimates this quarter (low visibility)*. Bold miss on profitability raises near‑term estimate risk. Values retrieved from S&P Global.
• Management tightened 2025 capex to $50–$60M (from $40–$65M) and now expects FY25 operating profit to be below prior guidance given tariff costs and weaker 2H demand; Q3 operating profit expected to improve sequentially on better volumes .
• Bookings fell sharply to $330M from $590M in Q1; backlog declined to ~$1.65B as shipments outpaced orders, with pronounced weakness in EMEA; HY instituted monthly price adjustments to track tariff cost swings .
• Liquidity intact: renewed $300M revolver with better terms; Q2 operating cash flow improved to $28.9M; net debt $406.3M; net debt/Adj EBITDA rose to 2.4x on lower LTM earnings .

What Went Well and What Went Wrong

• What Went Well

  • Price/cost agility and customer trust: “adjusting unit prices monthly based on actual product costs… raising prices as tariffs increase, lowering prices when tariff levels decrease… we chose not to retroactively raise prices on orders placed before recent tariff related cost escalation” (Rajiv Prasad) .
  • Product margins remained above targeted levels despite headwinds, supported by pricing discipline and mix .
  • Liquidity/working capital execution: revolver renewal to 2030 with improved covenants; Q2 CFO ~$28.9M; working capital at 21% of sales with inventory reductions ex-FX/tariff effects .

• What Went Wrong

  • Orders/demand: Bookings plunged to $330M (from $590M in Q1), backlog down to $1.65B; EMEA particularly weak as customers delayed capex amid tariff uncertainty .
  • Tariff costs and timing: ~$10M tariff-driven material/freight cost increase hit Q2; pricing actions have a lag, pressuring Q2 margins and adjusted operating profit .
  • EMEA profitability deterioration: EMEA swung to operating loss on lower volumes, lower pricing, and higher material/freight costs; Lift Truck adjusted operating profit declined sequentially on lower product margins .

Financial Results

Consolidated P&L (USD millions, except per-share)

Segment Revenue and Mix (USD millions)

Key KPIs and Balance Sheet

Consensus vs Actual (Q2 2025)

Values retrieved from S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategic posture: “Our strategy emphasizes manufacturing and selling products within the same region… while global component sourcing exposes us to tariffs… our modular vehicle design allows us to produce the same models at different locations… to control costs” (CEO) .
• Price discipline with customer trust: “We chose not to retroactively raise prices on orders placed before recent tariff‑related cost escalation,” paired with monthly adjustments to reflect tariff changes (CEO) .
• Longer-term outlook: “This is a period of extraordinary transition… tariffs, cyclical demand lows, and macro uncertainty… short‑term pressure but positioned to take advantage of the upturn… with a very dramatic upturn in revenues and profitability” (Executive Chairman) .

Q&A Highlights

• Seasonality/regions: Management expects typical North America seasonality with Q3 softness and a rebound in Q4; EMEA shipments likely weakest in Q3 due to holidays and macro softness (CEO) .
• Tariff pricing cadence/backlog economics: Monthly price updates now standard; Q2 backlog/pricing a mix of pre- and post‑tariff orders; mitigation actions incorporated into 2H outlook (CEO) .
• Competitive dynamics: Chinese OEMs are the most disruptive currently, supported by government policies and inventory build; traditional competitors remain disciplined (CEO/Chairman) .
• Backlog profitability/manufacturing efficiency: Pricing discipline remains; ASPs booked up ~10% YoY; key constraint is lower manufacturing efficiency at current volumes; footprint projects aim to reduce overhead (CFO/CEO) .
• Supply chain/tariff‑exposed components: Highly engineered components (e.g., castings) toughest to relocate quickly; capacity outside China/India ramping but requires time (CEO) .
• Bolzoni legacy exit: Targeting near‑zero legacy components (axles/transmissions) by ~2027; cylinders remain core (CEO) .

Estimates Context

• Consensus (S&P Global) for Q2 2025: Revenue $936.9M (2 ests), EBITDA $35.25M (2 ests), EPS $0.595 (2 ests); actuals: revenue $956.6M, Adj EBITDA $21.4M (reported), EPS $(0.79); revenue beat, but EBITDA/EPS significant misses*. Values retrieved from S&P Global.
• Implications: Street will likely cut 2H’25 EPS/EBITDA to reflect tariff lag and weaker EMEA orders; management’s sequential Q3 improvement and potential tax benefits could partially offset, but confidence hinges on tariff visibility and bookings recovery (management outlook) .

Key Takeaways for Investors

• Profitability miss was driven by tariff cost timing and lower volumes; despite price actions, tariff lags are real and likely to weigh on 2H profitability vs prior expectations .
• Orders are the swing factor: Q2 bookings collapse (especially EMEA) narrows near‑term visibility; watch monthly bookings and pricing mix cadence for signs of stabilization .
• Sequential setup: Q3 operating profit guided up vs Q2 on better volumes/efficiency; trade policy headlines and EMEA demand remain key near‑term stock catalysts .
• Balance sheet/liquidity are solid; revolver extension to 2030 and positive CFO re‑establish cushion to execute footprint and technology investments through the downturn .
• Structural initiatives (modular platforms, manufacturing optimization, energy solutions/automation) are intact and should lower breakevens and support margin expansion into the next upcycle (savings $30–$40M/yr from 2027) .
• Estimate risk skewed down near term (EPS/EBITDA) given tariff lag and EMEA weakness; potential U.S. tax reform benefits provide a partial offset as enacted in Q3 .
• Tactical: Monitor EMEA order momentum, tariff evolution, and execution on monthly pricing; any stabilization in bookings plus confirmation of Q3 sequential improvement could set up a relief move despite lowered FY25 profit outlook .

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Notes:

• All company figures cited from the Q2 2025 8‑K press release and earnings release unless otherwise specified ; parallel press release content corroborates . Prior quarter references from Q1 2025 8‑K/press release and Q4 2024 materials .
• Consensus values marked with an asterisk are from S&P Global; actuals as reported in company documents.