Hyster-Yale (NYSE:HY) executives highlighted improving order trends but continued pressure from tariffs and a shifting product mix during the company’s fourth-quarter and full-year 2025 earnings call. Management pointed to a sharp sequential pickup in bookings late in 2025 and into early 2026, while acknowledging that near-term profitability remains constrained by lower shipment volumes, tariff costs, and competitive pricing dynamics.
Fourth-quarter results: stronger bookings, lower revenue, tariff-driven loss
Investor Relations Director Andrea Sejba said fourth-quarter bookings strengthened significantly, rising 42% sequentially and 35% year-over-year, which management characterized as a potential early sign of demand recovery after an extended period of customer caution. She added that the first two months of 2026 continued the trend.
The quarter included significant tariff-related costs. Sejba said tariffs reduced both quarterly and full-year revenue and operating profits, and that the combination of tariffs and lower volumes resulted in an adjusted operating loss of $16 million in the fourth quarter. She noted this included $40 million in gross tariff costs.
Cash flow was a bright spot. Sejba reported operating cash flow of $57 million in the quarter, driven by “meaningful improvements in inventory efficiency,” as the company aligned production with demand, improved finished goods management, and reduced inventory levels.
Full-year 2025: lower revenue, modest adjusted operating profit amid tariffs
For full-year 2025, Sejba said revenue declined to $3.8 billion and the company reported adjusted operating profit of $16 million. The full-year figure included approximately $100 million in gross tariff costs, which she described as underscoring the magnitude of ongoing external pressure.
Market conditions and backlog: North America improving, other regions lag
CEO Rajiv Prasad said the global lift truck market remained challenged in the fourth quarter, with year-over-year declines across regions and truck classes. He said North America showed “meaningful sequential improvement” compared with the third quarter, supporting stronger bookings and better customer engagement. In contrast, he said demand in EMEA and JAPIC contracted sequentially as customers remained cautious amid macro uncertainty.
Prasad said customers across regions have been focused on cash preservation, higher financing costs, and fleet utilization, contributing to deferred capital spending—particularly for higher duty equipment.
Fourth-quarter bookings totaled $540 million, up from $380 million in the third quarter and $400 million in the prior-year quarter, with the Americas driving most of the increase. Prasad said the company saw particularly strong traction in core counterbalance Class Five trucks in the 1 to 3.5 ton range. He also said customers were converting quotes into firm orders at a materially higher rate, attributing the shift to factors including completed deliveries of extended backlog orders, increased clarity around operational needs, and early signs that deferred replacement cycles were re-engaging as fleets age and maintenance costs rise.
Backlog exiting the year was $1.28 billion, which Prasad said reflected shipments outpacing new orders, especially in EMEA. He said the sequential decline in backlog was driven primarily by lower unit volumes, partially offset by higher average selling prices tied to material and component costs, while currency movement reduced the translated value of backlog.
Looking to early 2026, Prasad said bookings have been strong across all regions, even though shipments began the year at lower levels than the fourth quarter. If the trend continues, he said bookings should begin to outpace shipments, allowing backlog to rebuild toward a more normalized three-to-four-month level and supporting more efficient production planning.
2026 outlook: first-half softness, second-half volume recovery, margins normalize
Prasad said the company expects the first quarter of 2026 to mark the trough of the current cycle, primarily reflecting lower order intake levels from earlier in 2025. He expects production and shipments to expand gradually through the year, with “meaningfully stronger volumes” in the second half of 2026.
Even with volume improvement, Prasad said near-term margin pressure is likely to persist due to several factors, including an ongoing market shift toward lighter duty, lower priced models and aggressive competitive pricing, particularly from foreign manufacturers in Europe and South America. He said the mix shift has reduced shipments in traditionally higher-margin categories.
In the Q&A, management said margins in 2023 and 2024 were “out of the ordinary,” referencing levels in the low 20s, and indicated expectations to normalize. Prasad said margin targets are in the mid-teens to high teens range depending on product line, and in response to a follow-up, he said it would be “a fair estimate” that gross margins could be in the mid- to high-teens exiting 2026 if the company is at the bottom of the cycle.
For 2026 results, Prasad said the company expects “moderate” full-year operating profit, with 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.
Cost actions, product investments, and tariffs
Management outlined several restructuring and optimization initiatives intended to reduce costs and improve resilience:
- Nuvera strategic realignment executed in the second quarter of 2025, which management said delivered $15 million of cost savings in 2025 and redeployed resources.
- A company-wide restructuring program launched in the fourth quarter of 2025 targeting $40 million to $45 million of annualized savings beginning in 2026.
- Manufacturing footprint optimization initiatives begun in 2024, expected to deliver $20 million to $30 million in benefit in 2027, with full annualized savings of $30 million to $40 million by 2028.
In total, Prasad said the company expects recurring annualized savings of $85 million to $100 million by 2028 compared to the beginning of 2025, before inflationary cost increases.
On tariffs, Prasad said the company’s assumptions (as outlined in the earnings release) were made prior to the IEEPA decision, and under those assumptions, forecasted tariff costs are expected to remain broadly consistent with fourth-quarter 2025 levels throughout 2026. He said the company has implemented pricing, sourcing, and cost initiatives but does not expect to fully offset tariff impacts, with mitigation benefits expected to increase beginning in the second quarter of 2026. He also noted the Supreme Court’s ruling was limited to IEEPA tariffs and did not invalidate other tariffs or address potential refunds, which he said could take years to resolve if required.
Prasad also described ongoing efforts to enhance manufacturing flexibility through modular platforms that allow the company to build the same models in multiple regions, helping it adapt to tariff changes and supply chain disruptions. In response to a question on sourcing moves, he said decisions are reviewed regularly, with meetings held monthly to adjust sourcing based on changing conditions.
Capital spending is expected to increase in 2026, with Prasad guiding to $55 million to $75 million of capital expenditures depending on the pace of production improvements. In the Q&A, he said spending is focused on product development (including modular platforms, automation, and lithium-ion-related systems), IT upgrades (including a new CRM system, upgrades to product lifecycle management, and a new ERP system for the parts business), and manufacturing footprint optimization and factory automation.
Management also discussed product launches and automation progress. Prasad said the company is launching new modular and scalable platform products for electric counterbalance trucks and beginning implementation in some warehouse products, with dealer introductions early in the month and availability for sale by month-end. He said automation efforts have been in pilot installations with “friendly customers,” which have gone well, with initial orders coming in. He said the official launch of the automated “IDA” truck is scheduled for April.
Executive Chairman Al Rankin said 2025 was a challenging year but emphasized actions taken to lower the cost structure, increase operational flexibility, sharpen the focus on cash generation, and invest in products and capabilities. Rankin said the company is seeing early signs of stabilization, with improving customer engagement and aging fleets driving renewed focus on replacement, and he characterized 2026 as a potential turning point with stronger performance expected as the year progresses.
About Hyster-Yale (NYSE:HY)
Hyster-Yale Materials Handling, Inc is a global manufacturer and distributor of a wide range of industrial lift trucks, container handlers and aftermarket parts and services. Operating under the Hyster and Yale brand names, the company designs, engineers and assembles counterbalanced lift trucks, narrow-aisle trucks and specialty vehicles for clients in distribution, manufacturing, retail and warehousing.
The company’s product portfolio includes electric, diesel and LPG-powered forklifts, as well as reach stackers, empty container handlers and terminal tractors.
