Hyster-Yale Materials Handling Stock

Hyster-Yale Materials Handling, Inc. (Hyster-Yale) and its subsidiaries, including its operating company Hyster-Yale Group, Inc. (‘HYG’), is a globally integrated company offering a full line of high-quality, application-tailored lift trucks and solutions aimed at meeting the specific materials handling needs of its customers.

The company’s solutions include attachments and hydrogen fuel cell power products, telematics, automation and fleet management services, as well as a variety of other power options for its lift trucks. The company is headquartered in Cleveland, Ohio. Through HYG, the company designs, engineers, manufactures, sells and services a comprehensive line of lift trucks, attachments and aftermarket parts marketed globally, primarily under the Hyster and Yale brand names, mainly to independent Hyster and Yale retail dealerships.

The company owns a 90% majority interest in Hyster-Yale Maximal Forklift (Zhejiang) Co., Ltd. (‘Hyster-Yale Maximal’), a Chinese manufacturer of low-intensity and standard lift trucks and specialized material handling equipment. Hyster-Yale Maximal also designs and produces specialized products in the port equipment and rough terrain forklift markets. Lift trucks and component parts are manufactured in the United States, Northern Ireland, China, Mexico, the Netherlands, Brazil, the Philippines, Italy, Japan and Vietnam.

The company’s segments for the lift truck business include the following: the Americas, EMEA and JAPIC. Americas includes lift truck operations in the United States, Canada, Mexico, Brazil, Latin America and the corporate headquarters. EMEA includes operations in Europe, the Middle East and Africa. JAPIC includes operations in the Asia and Pacific regions, including China, as well as the equity earnings of SN operations.

The company operates Bolzoni S.p.A. (‘Bolzoni’). Bolzoni is a leading worldwide producer and distributor of attachments, forks and lift tables marketed under the Bolzoni, Auramo and Meyer brand names. Bolzoni also produces components for lift truck manufacturers. Bolzoni products are manufactured in the United States, Italy, China, Germany and Finland. Through the design, production and distribution of a wide range of attachments, Bolzoni has a strong presence in the market niche of lift truck attachments and industrial material handling.

The company operates Nuvera Fuel Cells, LLC (‘Nuvera’). Nuvera is an alternative-power technology company focused on the design, manufacture and sale of hydrogen fuel cell stacks and engines.

Manufacturing and Assembly

The company manufactures components, such as frames, masts and transmissions, and assembles lift trucks in the market of sale whenever practical to minimize freight cost and balance currency mix. In some instances, however, it utilizes one worldwide location to manufacture specific components or assemble specific lift trucks. Additionally, components and assembled lift trucks are exported when it is advantageous to meet demand in certain markets. The company operates eleven lift truck manufacturing and assembly facilities worldwide with four plants in the Americas, three in EMEA and four in JAPIC, including joint venture operations. In addition, the company operates six principal Bolzoni manufacturing facilities worldwide.

Aftermarket Parts

The company offers a line of aftermarket parts to service its large installed base of lift trucks in use in the industry. The company offers online technical reference databases specifying the required aftermarket parts to service lift trucks and an aftermarket parts ordering system.

The company sells Hyster- and Yale-branded aftermarket parts to dealers for Hyster and Yale lift trucks. The company also sells aftermarket parts under the UNISOURCE and PREMIER brands to Hyster and Yale dealers for the service of competitor lift trucks. The company has a contractual relationship with a third-party, multi-brand, aftermarket parts wholesaler in the Americas and EMEA whereby orders from the company’s dealers for parts are fulfilled by the third party who then pays the company a commission.

Marketing

The company’s marketing organization is structured in three regional divisions: the Americas; EMEA, which includes Europe, the Middle East and Africa; and JAPIC, which includes Japan, Asia, Pacific, India and China. In each region, certain marketing support functions for the Hyster and Yale brands are carried out by shared-services teams. These activities include sales and service training, information systems support, product launch coordination, specialized sales material development, help desks, order entry, marketing strategy and field service support.

Trademarks

The company owns the Hyster, Yale, Maximal, Bolzoni, Auramo, Meyer and Nuvera trademarks and these trademarks are material to its business.

Distribution Network

The company distributes lift trucks and attachments primarily through two channels: independent dealers and a direct sales program to major customers. In addition, the company distributes aftermarket parts and services for its lift trucks through its independent dealers. The company’s end-user base is diverse and fragmented, including but not limited to the following industries: light and heavy manufacturers, trucking and automotive, rental, building materials and paper suppliers, lumber, metal products, warehouses, retailers, food and beverage distributors, container handling and the U.S. and non-U.S. governmental agencies.

Independent Dealers

The company’s dealers, located in 123 countries, are generally independently owned and operated.

Global Accounts

The company operates a direct sales program to major customers or global accounts for both Hyster and Yale. This program focuses on large customers with centralized purchasing and geographically dispersed operations in multiple dealer territories. This program accounted for 19% of new lift truck unit volume in 2023. The independent dealers support these major customers by providing aftermarket parts and service on a local basis. Dealers receive a commission for the support they provide in connection with these major customer sales and for the preparation and delivery of lift trucks to customer locations. In addition to selling new lift trucks, this global accounts program markets services, including full maintenance leases and fleet management.

Financing of Sales

The company is engaged in a joint venture with Wells Fargo Financial Leasing, Inc. (‘WF’) to provide dealer and customer financing of new lift trucks in the United States. The company owns 20% of the joint venture entity, HYG Financial Services, Inc. (‘HYGFS’), and receives fees and certain remarketing profits under a joint venture agreement. During 2022, the agreement was amended to extend the term through December 2028. The agreement automatically renews for additional one-year terms unless written notice is given by either party at least 180 days prior to termination. The company accounts for its ownership of HYGFS using the equity method of accounting.

Under the joint venture agreement with HYGFS, the company’s dealers and certain customers are extended credit for the purchase of lift trucks to be placed in the dealer’s floor plan inventory or the financing of lift trucks that are sold or leased to customers. For some of these arrangements, the company provides recourse or repurchase obligations to HYGFS or to others. In substantially all of these transactions, a perfected security interest is maintained in the lift trucks financed, so that in the event of a default, the company has the ability to take title to the assets financed and sell it through the Hyster or Yale dealer network. Furthermore, the company has established reserves for exposures under these agreements when required. In addition, the company has an agreement with WF to limit its exposure to losses at certain eligible dealers.

Key Suppliers

The company depends on a limited number of suppliers for some of the company’s crucial components, including diesel and gasoline engines, which are supplied by, among others, Power Solutions International, Inc., Yanmar Power Technology Co., LTD. and Kubota Corp.; drive-system components, which are supplied by, among others, Dana Corporation, ZF Company and Zapi Inc.; and cast-iron counterweights used to counter balance some lift trucks, which are obtained from, among others, Eagle Quest International Ltd. and BTS5 Incorporated. Some of these critical components are imported and subject to regulations, such as customary inspection by the U.S. Customs and Border Protection under the auspices of the U.S. Department of Homeland Security, as well as the company’s own internal controls and security procedures.

Sumitomo-NACCO Joint Venture

The company has a 50% ownership interest in Sumitomo NACCO Forklift Co., Ltd. (‘SN’), a limited liability company that was formed in 1970 primarily to manufacture and distribute Sumitomo-branded lift trucks in Japan and export Hyster- and Yale-branded lift trucks and related components and service parts outside of Japan. Sumitomo Heavy Industries, Ltd. owns the remaining 50% interest in SN. Each stockholder of SN is entitled to appoint directors representing 50% of the vote of SN’s board of directors. All matters related to policies and programs of operation, manufacturing and sales activities require mutual agreement between the company and Sumitomo Heavy Industries, Ltd. prior to a vote of SN’s board of directors. As a result, the company accounts for its ownership in SN using the equity method of accounting. The company purchases Hyster- and Yale-branded lift trucks and related component and aftermarket parts from SN for sale outside of Japan under agreed-upon terms. The company also contracts with SN for engineering design services on a cost plus basis and charges SN for technology used by SN but developed by the company. During 2023, SN sold approximately 8,000 lift trucks.

Research and Development Costs

The company’s expenses associated with the development of new products and changes to existing products are charged to expense as incurred. These costs amounted to $119.7 million in 2023.

History

Hyster-Yale Materials Handling, Inc. was incorporated as a Delaware corporation in 1991.