Hyster-Yale Materials Handling Sees Continued Q2 Revenue And Operating Profit Growth Compared To The Prior Year As Unit Volumes Increase And Higher-Priced, Higher-Margin Backlog Units Are Shipped; FY24 Lift Truck Revenues And Operating Profit Are Expected To Increase Over 2023
The Company expects continued second-quarter revenue and operating profit growth compared to the prior year as unit volumes increase and higher-priced, higher-margin backlog units are shipped. Modestly higher labor costs, combined with the anticipated expiration of tariff exemptions in late May 2024, are expected to temper the favorable second-quarter price-to-cost ratio compared to the first quarter.
Full-year 2024 Lift Truck revenues and operating profit are expected to increase over 2023. These expected results, however, are now greater than the Company's previously communicated expectations and include the better-than-expected Q1 2024 results and anticipated improvements in subsequent quarters.
Consolidated Outlook
At the consolidated level, Hyster-Yale expects 2024 full-year revenue, operating profit and net income to increase compared to strong 2023 levels, and be higher than expected at the time of the Q4 2023 earnings release. Due to the better-than-expected Q1 2024 results and anticipated improvements in the following quarters, full-year 2024 results are expected to improve compared to the Company's prior 2024 expectations. However, the Company expects the 2024 income tax rate to be higher than 2023, largely due to the capitalization of research and development expenses.
In Q2 2024, the Company anticipates continued strong product margins from lift truck shipments of higher-priced, higher-margin backlog units will drive year-over-year profit growth. Q2 2024 profits are expected to be significantly higher than Q2 2023 levels but modestly lower than the better-than-expected Q1 2024 results. This decrease is expected to be due to the potential expiration of Section 301 tariff exemptions on May 31, 2024.
For full-year 2024, continued progress is expected toward the Company's 7% operating profit margin goal in its core Lift Truck and Bolzoni businesses, and achievement of a second year at 20% plus return on its total capital employed goal. The Company started the year off with very strong first-quarter results that exceeded expected levels. While, the Company is committed to systematic and sustainable progress toward its goals over time, it expects results to moderate somewhat over the remaining 2024 quarters.
Hyster-Yale is also committed to reducing leverage and improving cash flows. The Company continues to focus on decreasing working capital, particularly by further improving inventory levels despite increased production rates in the context of reduced supply chain and labor constraints. Capital expenditures are expected to be $84 million in 2024, down modestly from an initial projection of $87 million. While substantial investments are anticipated, maintaining liquidity remains a priority. Overall, the Company expects a significant increase in free cash flow from operations in 2024 compared with 2023.