Hyster-Yale Materials Handling (HY)

Lift truck and material handling solutions manufacturer Hyster-Yale Materials Handling (NYSE:HY) reported Q3 CY2025 results exceeding the market’s revenue expectations, but sales fell by 3.6% year on year to $979.1 million. Its non-GAAP loss of $0.09 per share was 35.7% above analysts’ consensus estimates.

Company Overview

Playing a significant role in the development of the hydraulic lift truck, Hyster-Yale (NYSE:HY) designs, manufactures, and sells materials handling equipment to various sectors.

Automation that increases efficiency and connected equipment that collects analyzable data have been trending, creating new demand. Some professional tools and equipment companies also provide software to accompany measurement or automated machinery, adding a stream of recurring revenues to their businesses. On the other hand, professional tools and equipment companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.

Competitors offering similar products include Toyota Material Handling (NYSE:TM), Crown Holdings (NYSE:CCK), and CLARK Material Handling (private).

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Hyster-Yale Materials Handling’s sales grew at a tepid 6% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector and is a tough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Hyster-Yale Materials Handling’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 2% annually.

This quarter, Hyster-Yale Materials Handling’s revenue fell by 3.6% year on year to $979.1 million but beat Wall Street’s estimates by 2.5%.

Looking ahead, sell-side analysts expect revenue to decline by 3.3% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its products and services will face some demand challenges.

Hyster-Yale Materials Handling has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 16.7% gross margin over the last five years. That means Hyster-Yale Materials Handling paid its suppliers a lot of money ($83.30 for every $100 in revenue) to run its business.

Hyster-Yale Materials Handling was profitable over the last five years but held back by its large cost base. Its average operating margin of 1.9% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, Hyster-Yale Materials Handling’s operating margin rose by 3.3 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q3, Hyster-Yale Materials Handling’s breakeven margin was down 3 percentage points year on year. The contraction shows it was less efficient because its expenses increased relative to its revenue.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Hyster-Yale Materials Handling, its EPS declined by 2.6% annually over the last five years while its revenue grew by 6%. However, its operating margin actually improved during this time, telling us that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings.

Diving into the nuances of Hyster-Yale Materials Handling’s earnings can give us a better understanding of its performance. A five-year view shows Hyster-Yale Materials Handling has diluted its shareholders, growing its share count by 5.4%. This dilution overshadowed its increased operational efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Hyster-Yale Materials Handling, its two-year annual EPS declines of 58.7% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, Hyster-Yale Materials Handling reported adjusted EPS of negative $0.09, down from $0.97 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Hyster-Yale Materials Handling broke even from a free cash flow perspective over the last five years, giving the company limited opportunities to return capital to shareholders.

Taking a step back, an encouraging sign is that Hyster-Yale Materials Handling’s margin expanded by 6.6 percentage points during that time. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability.

Hyster-Yale Materials Handling’s free cash flow clocked in at $37.1 million in Q3, equivalent to a 3.8% margin. The company’s cash profitability regressed as it was 2.1 percentage points lower than in the same quarter last year, but it’s still above its five-year average. We wouldn’t put too much weight on this quarter’s decline because investment needs can be seasonal, causing short-term swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Hyster-Yale Materials Handling historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 4.5%, lower than the typical cost of capital (how much it costs to raise money) for industrials companies.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Hyster-Yale Materials Handling’s ROIC has increased. This is a good sign, but we recognize its lack of profitable growth during the COVID era was the primary reason for the change.

Hyster-Yale Materials Handling reported $71.1 million of cash and $467.8 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $136 million of EBITDA over the last 12 months, we view Hyster-Yale Materials Handling’s 2.9× net-debt-to-EBITDA ratio as safe. We also see its $23.3 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Hyster-Yale Materials Handling beat analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its EBITDA missed. Overall, this print had some key positives. The market seemed to be hoping for more, and the stock traded down 1.4% to $34.15 immediately after reporting.

Updated: December 4, 2025 at 10:07 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Hyster-Yale Materials Handling, you should also grasp the company’s longer-term business quality and valuation.

Hyster-Yale Materials Handling falls short of our quality standards. To kick things off, its revenue growth was uninspiring over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its rising cash profitability gives it more optionality, the downside is its projected EPS for the next year is lacking. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

Hyster-Yale Materials Handling’s EV-to-EBITDA ratio based on the next 12 months is 10.1x. This multiple tells us a lot of good news is priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $36.50 on the company (compared to the current share price of $36.34).