HYSTER-YALE, INC. 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Millions, Except Per Share and Percentage Data) Hyster-Yale Materials Handling, Inc. ("Hyster-Yale" or the "Company") and its subsidiaries, including its operating company Hyster-Yale Group, Inc. ("HYG"), is a leading, globally integrated, full-line lift truck manufacturer. The Company offers a broad array of solutions aimed at meeting the specific materials handling needs of its customers, including 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, through HYG, 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 materials handling business historically has been cyclical because the rate of orders for lift trucks fluctuates depending on the general level of economic activity in the various industries and countries its customers serve. Lift trucks and component parts are manufactured in the United States, China, Northern Ireland, Mexico, the Netherlands, the Philippines, Japan, Italy, Brazil and Vietnam. 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 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. During 2020, broad measures taken by governments, businesses and others across the globe to limit the spread of novel coronavirus ("COVID-19") adversely affected the Company. The resulting significant decline in economic activity also reduced the demand for the Company's products and limited the availability of components from certain suppliers. Production was significantly reduced or suspended at the Company's Chinese and European facilities for certain periods during the first and second quarters of 2020. The Company also initiated several cost reduction measures designed to ease liquidity pressure. These cost containment actions included spending and travel restrictions, significant reductions in temporary personnel, furloughs, suspension of incentive compensation and profit sharing, benefit reductions and salary reductions. Effective January 1, 2021, the Company reinstated pre-pandemic salaries, benefits and incentive compensation programs. The cost containment actions associated with hiring, use of contract and temporary workers, travel and meetings, as well as other discretionary spending are continuing. These measures are expected to remain in place until market and economic uncertainty dissipates and results improve further, which the Company expects to occur over the course of 2021. In addition, the Company adjusted production levels in 2020 at its manufacturing plants to align more closely with the reduced levels of demand, and worked closely with suppliers to help ensure current needs were met while also promoting continuity as the market improved. However, despite these efforts, during the first quarter of 2021, the Company experienced further pandemic-related and other global supply chain constraints, component shortages, shipping container availability constraints and higher freight costs, as well as significant material cost inflation resulting from the accelerated pace of the market recovery, all of which have negatively impacted the Company. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Please refer to the discussion of Critical Accounting Policies and Estimates as disclosed on pages 15 through 17 in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. Critical Accounting Policies and Estimates have not materially changed since December 31, 2020. See Note 2 to the unaudited condensed consolidated financial statements for a discussion of the new accounting pronouncements adopted on January 1, 2021. 21 Table of Contents FINANCIAL REVIEW The results of operations for the Company were as follows: THREE MONTHS ENDED Favorable / (Unfavorable) MARCH 31 2021 2020 % Change Lift truck unit shipments (in thousands) Americas 12.3 16.0 (23.1) % EMEA 6.5 5.3 22.6 % JAPIC 3.5 2.0 75.0 % 22.3 23.3 (4.3) % Revenues Americas $ 459.7 $ 550.7 (16.5) % EMEA 170.7 152.1 12.2 % JAPIC 60.5 44.6 35.7 % Lift truck business 690.9 747.4 (7.6) % Bolzoni 79.5 87.9 (9.6) % Nuvera — 1.4 (100.0) % Eliminations (38.2) (51.0) (25.1) % $ 732.2 $ 785.7 (6.8) % Gross profit (loss) Americas $ 75.3 $ 99.7 (24.5) % EMEA 23.5 19.3 21.8 % JAPIC 6.6 4.5 46.7 % Lift truck business 105.4 123.5 (14.7) % Bolzoni 16.4 16.9 (3.0) % Nuvera (3.3) (2.6) (26.9) % Eliminations (0.1) (1.1) n.m. $ 118.4 $ 136.7 (13.4) % Selling, general and administrative expenses Americas $ 60.7 $ 61.2 0.8 % EMEA 23.4 23.8 1.7 % JAPIC 9.1 10.5 13.3 % Lift truck business 93.2 95.5 2.4 % Bolzoni 15.6 14.2 (9.9) % Nuvera 6.5 6.8 4.4 % $ 115.3 $ 116.5 1.0 % Operating profit (loss) Americas $ 14.6 $ 38.5 (62.1) % EMEA 0.1 (4.5) n.m. JAPIC (2.5) (6.0) 58.3 % Lift truck business 12.2 28.0 (56.4) % Bolzoni 0.8 2.7 (70.4) % Nuvera (9.8) (9.4) (4.3) % Eliminations (0.1) (1.1) n.m. $ 3.1 $ 20.2 (84.7) % Interest expense $ 2.8 $ 4.3 34.9 % Other income $ (8.2) $ (3.8) 115.8 % 22 Table of Contents THREE MONTHS ENDED Favorable / (Unfavorable) MARCH 31 2021 2020 % Change Net income (loss) attributable to stockholders Americas $ 9.5 $ 27.8 (65.8) % EMEA 0.9 (3.1) n.m. JAPIC (2.2) (4.6) 52.2 % Lift truck business 8.2 20.1 (59.2) % Bolzoni 0.6 2.7 (77.8) % Nuvera (3.8) (6.7) 43.3 % Eliminations 0.6 (0.8) n.m. $ 5.6 $ 15.3 (63.4) % Diluted earnings per share $ 0.33 $ 0.91 (63.7) % Reported income tax rate 28.2 % 20.8 % n.m. - not meaningful Following is the detail of the Company's unit shipments, bookings and backlog of unfilled orders placed with its manufacturing and assembly operations for new lift trucks, reflected in thousands of units. As of March 31, 2021, substantially all of the Company's backlog is expected to be sold within the next twelve months. THREE MONTHS ENDED MARCH 31 2021 2020 Unit backlog, beginning of period 40.6 41.2 Unit shipments (22.3) (23.3) Unit bookings 42.4 19.4 Unit backlog, end of period 60.7 37.3 The following is the detail of the approximate sales value of the Company's lift truck unit bookings and backlog, reflected in millions of dollars. The dollar value of bookings and backlog is calculated using the current unit bookings and backlog and the forecasted average sales price per unit. THREE MONTHS ENDED MARCH 31 2021 2020 Bookings, approximate sales value $ 970 $ 500 Backlog, approximate sales value $ 1,520 $ 960 23 Table of Contents First Quarter of 2021 Compared with First Quarter of 2020 The following table identifies the components of change in revenues for the first quarter of 2021 compared with the first quarter of 2020: Revenues 2020 $ 785.7 Increase (decrease) in 2021 from: Unit volume and product mix (81.6) Bolzoni revenues (8.4) Nuvera revenues (1.4) Price (1.2) Parts (0.2) Foreign currency 16.1 Eliminations 12.8 Other 10.4 2021 $ 732.2 Revenues decreased 6.8% to $732.2 million in the first quarter of 2021 from $785.7 million in the first quarter of 2020, mainly due to lower unit volumes, mainly in the Americas and at Bolzoni. The decrease was primarily due to COVID-19 pandemic-related global supply chain constraints and component shortages in the lift truck business and the continued lower economic activity at Bolzoni. The decrease in revenue was partially offset by favorable currency movements from the translation of sales into U.S. dollars and lower eliminations of intercompany sales. Revenues in the Americas decreased in the first quarter of 2021 compared with the first quarter of 2020, primarily from lower unit volumes in all classes of lift trucks due to COVID-19 pandemic-related global supply chain constraints and component shortages. EMEA's revenues increased mainly due to favorable foreign currency movements of $17.3 million from the translation of sales into U.S. dollars. JAPIC's revenues increased primarily as a result of improved unit volumes and favorable foreign currency movements of $2.8 million, partially offset by a shift in sales to lower-priced lift trucks. The decrease in Bolzoni's revenues was mainly due to lower sales from continued lower economic activity from the COVID-19 pandemic, partially offset by favorable foreign currency movements. The following table identifies the components of change in operating profit for the first quarter of 2021 compared with the first quarter of 2020: Operating Profit 2020 $ 20.2 Increase (decrease) in 2021 from: Lift truck gross profit (17.1) Bolzoni operations (1.9) Nuvera operations (0.4) Lift truck selling, general and administrative expenses 2.3 2021 $ 3.1 The Company recognized operating profit of $3.1 million in the first quarter of 2021 compared with $20.2 million in the first quarter of 2020. The decrease in operating profit was mainly due to lower gross profit, primarily from lower unit volume due to COVID-19 pandemic-related supply constraints, mainly in the Americas, in addition to higher material and freight costs. The decline in gross profit was somewhat offset by favorable foreign currency movements and lower selling, general and administrative expenses in the lift truck business despite the add back of pre-pandemic employee-related salaries and benefits, including $9.0 million of incentive compensation, as the Company has continued certain cost containment actions to mitigate the impact of the COVID-19 pandemic. 24 Table of Contents Operating profit in the Americas decreased in the first quarter of 2021 compared with the first quarter of 2020 due to a significant decrease in gross profit partly offset by modestly lower operating expenses. Gross profit declined mainly due to lower unit volumes, material cost inflation and increased freight costs, as well as higher manufacturing costs resulting from inefficiencies associated with component shortages. A shift in mix to lower-margin products also contributed to the decrease in gross profit. Despite the reinstatement of pre-pandemic salaries and benefits, including $6.9 million of incentive compensation, ongoing cost containment actions resulted in a modest decrease in operating expenses compared with the prior year quarter. EMEA recognized operating profit of $0.1 million in the first quarter of 2021 compared with an operating loss of $4.5 million in the first quarter of 2020 mainly as a result of improved gross profit from favorable foreign currency movements of $3.5 million. JAPIC's operating loss decreased to $2.5 million in the first quarter of 2021 from $6.0 million in the first quarter of 2020 primarily due to improved gross profit from higher unit volume and favorable foreign currency movements of $2.4 million and lower selling, general and administrative expenses. Operating profit at Bolzoni decreased to $0.8 million in the first quarter of 2021 compared with $2.7 million in the first quarter of 2020 mainly from higher selling, general and administrative expenses and lower gross profit. The Company recognized net income attributable to stockholders of $5.6 million in the first quarter of 2021 compared with $15.3 million in the first quarter of 2020. The decrease was primarily the result of lower operating profit. This was partially offset by a $4.6 million gain related to the sale of the Company's preferred shares of OneH2 in the first quarter of 2021, as well as favorable mark-to-market adjustments on an equity investment in a third-party and lower interest expense. LIQUIDITY AND CAPITAL RESOURCES Cash Flows The following tables detail the changes in cash flow for the three months ended March 31: 2021 2020 Change Operating activities: Net income $ 6.1 $ 15.6 $ (9.5) Depreciation and amortization 11.7 10.4 1.3 Gain on sale of investment (4.6) — (4.6) Dividends from unconsolidated affiliates 5.5 7.3 (1.8) Working capital changes (56.7) (81.5) 24.8 Other (9.1) 2.5 (11.6) Net cash used for operating activities (47.1) (45.7) (1.4) Investing activities: Expenditures for property, plant and equipment (7.7) (17.6) 9.9 Proceeds from the sale of assets 1.5 0.2 1.3 Proceeds from the sale of investment 15.7 — 15.7 Net cash provided by (used for) investing activities 9.5 (17.4) 26.9 Cash flow before financing activities $ (37.6) $ (63.1) $ 25.5 Net cash used for operating activities increased $1.4 million in the first three months of 2021 compared with the first three months of 2020, primarily as a result of lower net income, the impact of currency translation included in "Other" and the gain on the sale of the Company's preferred share investment in OneH2, partially offset by the change in working capital items. The change in working capital was mainly due to significantly lower payments of employee-related compensation in the first quarter of 2021 compared with the first quarter of 2020 due to the Company's cost containment actions in 2020. This was partially offset by higher inventory levels in the first quarter of 2021 resulting from COVID-19 pandemic-related global supply chain constraints and component shortages. The change in net cash provided by (used for) investing activities during the first three months of 2021 compared with the first three months of 2020 is due to the proceeds from the sale of preferred shares of OneH2 for $15.7 million and lower capital expenditures in 2021. 25 Table of Contents 2021 2020 Change Financing activities: Net increase (decrease) of long-term debt and revolving credit agreements $ (2.7) $ 58.5 $ (61.2) Cash dividends paid (5.3) (5.3) — Other — (0.1) 0.1 Net cash provided by (used for) financing activities $ (8.0) $ 53.1 $ (61.1) Net cash provided by (used for) financing activities decreased $61.1 million in the first three months of 2021 compared with the first three months of 2020. The decrease was primarily related to lower borrowings on the Facility (as defined below) in the first three months of 2021 compared with the first three months of 2020. Financing Activities The Company has a $240.0 million secured, floating-rate revolving credit facility (the "Facility”) that expires in April 2022. There were no borrowings outstanding under the Facility at March 31, 2021. The availability under the Facility at March 31, 2021 was $235.5 million, which reflects reductions of $4.5 million for letters of credit and other restrictions. As of March 31, 2021, the Facility consisted of a U.S. revolving credit facility of $150.0 million and a non-U.S. revolving credit facility of $90.0 million. The obligations under the Facility are generally secured by a first lien on the working capital assets of the borrowers in the Facility, which include but are not limited to, cash and cash equivalents, accounts receivable and inventory (the "Facility Collateral") and a second lien on the Term Loan Collateral (defined below). The approximate book value of assets held as collateral under the Facility was $950 million as of March 31, 2021. Borrowings bear interest at a floating rate based on a base rate or LIBOR, as defined in the Facility, plus an applicable margin. The applicable margins, as of March 31, 2021, for U.S. base rate loans and LIBOR loans were 0.25% and 1.25%, respectively. The applicable margin, as of March 31, 2021, for non-U.S. base rate loans and LIBOR loans was 1.25%. The Facility also required the payment of a fee of 0.25% per annum on the unused commitments as of March 31, 2021. The Facility includes restrictive covenants, which, among other things, limit additional borrowings and investments of the Company and its subsidiaries subject to certain thresholds, as set forth in the Facility, and limits the payment of dividends. If average availability for both total and U.S. revolving credit facilities, on a pro forma basis, is greater than 15% and less than or equal to 20%, the Company may pay dividends subject to achieving a minimum Fixed Charge Coverage Ratio of 1.00 to 1.00, as defined in the Facility. If the average availability is greater than 20% for both total and U.S. revolving credit facilities, on a pro forma basis, the Company may pay dividends without any minimum Fixed Charge Coverage Ratio requirement. The Facility also requires the Company to achieve a minimum Fixed Charge Coverage Ratio in certain circumstances in which total excess availability is less than 10% of the total commitments under the Facility or excess availability under the U.S. revolving credit facility is less than 10% of the U.S. revolver commitments, as defined in the Facility. At March 31, 2021, the Company was in compliance with the covenants in the Facility. The Company also has a $200.0 million term loan (the "Term Loan"), which matures in May 2023. The Term Loan requires quarterly principal payments on the last business day of each March, June, September and December in an amount equal to $2.5 million. The final principal repayment is due on May 30, 2023. The Company may also be required to make mandatory prepayments, in certain circumstances, as provided in the Term Loan. At March 31, 2021, there was $162.5 million of principal outstanding under the Term Loan which has been reduced in the unaudited condensed consolidated balance sheet by $1.7 million for discounts and unamortized deferred financing fees. The obligations under the Term Loan are generally secured by a first priority lien on the present and future shares of capital stock, material real property, fixtures and general intangibles consisting of intellectual property (collectively, the "Term Loan Collateral") and a second priority lien on the Facility Collateral. The approximate book value of assets held as collateral under the Term Loan was $640 million as of March 31, 2021. Borrowings under the Term Loan bear interest at a floating rate, which can be a base rate or Eurodollar rate, as defined in the Term Loan, plus an applicable margin. The applicable margin, as provided in the Term Loan, is 2.25% for base rate loans and 3.25% for Eurodollar loans. The interest rate on the amount outstanding under the Term Loan at March 31, 2021 was 3.36%. In addition, the Term Loan includes restrictive covenants, which, among other things, limit additional borrowings and investments of the Company subject to certain thresholds, as provided in the Term Loan. The Term Loan limits the payment of regularly scheduled dividends and other restricted payments to $50.0 million in any fiscal year, unless the consolidated total net leverage 26 Table of Contents ratio, as defined in the Term Loan, does not exceed 1.75 to 1.00 at the time of the payment. At March 31, 2021, the Company was in compliance with the covenants in the Term Loan. The Company had other debt outstanding, excluding finance leases, of approximately $97.2 million at March 31, 2021. In addition to the excess availability under the Facility of $235.5 million, the Company had remaining availability of $29.8 million related to other non-U.S. revolving credit agreements. The Company believes funds available from cash on hand, the Facility, other available lines of credit and operating cash flows will provide sufficient liquidity to meet its operating needs and commitments during the next twelve months and until the expiration of the Facility in April 2022. Contractual Obligations, Contingent Liabilities and Commitments Since December 31, 2020, there have been no significant changes in the total amount of the Company's contractual obligations or commercial commitments, or the timing of cash flows in accordance with those obligations, as reported on pages 23 and 24 in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. Capital Expenditures The following table summarizes actual and planned capital expenditures: Three Months Ended March 31, 2021 Planned for Remainder of 2021 Planned 2021 Total Actual 2020 Lift truck business $ 6.2 $ 47.8 $ 54.0 $ 44.2 Bolzoni 1.3 9.5 10.8 5.3 Nuvera 0.2 3.0 3.2 2.2 $ 7.7 $ 60.3 $ 68.0 $ 51.7 Planned expenditures for the remainder of 2021 are primarily for product development, improvements to information technology infrastructure, improvements at manufacturing locations and manufacturing equipment. The principal sources of financing for these capital expenditures are expected to be internally generated funds and bank financing. Capital Structure The Company's capital structure is presented below: MARCH 31 2021 DECEMBER 31 2020 Change Cash and cash equivalents $ 103.0 $ 151.4 $ (48.4) Other net tangible assets 630.8 615.7 15.1 Intangible assets 55.2 58.5 (3.3) Goodwill 112.2 114.7 (2.5) Net assets 901.2 940.3 (39.1) Total debt (285.4) (289.2) 3.8 Total equity $ 615.8 $ 651.1 $ (35.3) Debt to total capitalization 32 % 31 % 1 % BUSINESS PROSPECTS Lift truck markets grew significantly faster than anticipated during the 2021 first quarter, with markets ending the quarter substantially higher than pre-pandemic levels. Excluding China, where the market increased more than 130% over the 2020 first quarter when China was the most affected by pandemic-related shutdowns, the global lift truck market increased 46% compared with the first quarter of 2020. Compared to the fourth quarter of 2020, the global lift truck market, including China, increased 20% in the 2021 first quarter driven by a 24.2% increase in EMEA, a 23.9% increase in the Americas and a 17.7% increase in China. The market improvements over the fourth quarter and the Company's share gain programs translated into a substantial increase in the Company's 2021 first quarter bookings and into market share improvements in the Americas, EMEA, Asia and India markets. 27 Table of Contents Market growth for the remainder of the year is expected to moderate from the high growth rates of the 2021 first quarter. In addition, the Company is anticipating a slowdown of bookings in the 2021 second quarter as price increases are implemented to mitigate the impact of material and freight cost inflation. Nevertheless, the Company continues to expect increased bookings for the 2021 full year compared with the low levels in 2020, as a result of anticipated continued market growth and the strategic projects which the Company continues to pursue at each of its businesses to enhance market share. These strategic projects gained traction in the first quarter, although definitive time frames for achieving full share gain results are still uncertain due both to the timing of the full impact of the strategic projects and the continuing financial impact of the pandemic and subsequent pandemic-related supply chain and cost challenges. Until COVID-19 cases are consistently at safe low levels, the Company plans to continue to maintain procedures designed to limit the exposure of employees to the spread of COVID-19. At the same time, the Company and its employees remain committed to meeting the needs of dealers and end customers by ensuring they receive equipment, parts and services in a timely manner to the degree reasonably possible. While recent market and bookings activity are strong and while growth since the 2020 second quarter shutdowns has been better than expected, the level of future bookings and the resulting shipments are still uncertain. Overall, the Company continues to operate on the assumption that the economic and market environment will remain difficult in 2021 until COVID-19 vaccinations and alternative therapies are fully implemented, cases decrease to substantially lower levels and related supply chain issues are resolved. Early in 2020, the Company put in place plans to mitigate the impact of declining markets and bookings and the consequential impact of reduced manufacturing activity from pandemic-related shutdowns by initiating cost reduction measures. These measures included spending and travel restrictions, significant reductions in temporary personnel, furloughs, salary reductions and suspension of other benefits, including incentive compensation. Effective January 1, 2021, the Company reinstated pre-pandemic salaries, benefits and incentive compensation programs. The other cost containment actions are continuing, and are expected to remain in place until market and economic uncertainty dissipates and results improve further, which the Company expects to occur over the course of 2021. In the 2020 fourth quarter, the Company restructured some of its operations to create a more sustainable long-term cost structure. The Company anticipates it will incur charges of approximately $1.1 million in 2021 for additional costs related to this restructuring. Estimated benefits from this restructuring program are expected to be approximately $10.4 million annually beginning in 2022. The Company adjusted production levels at its manufacturing plants early in 2020 to align them more closely with the lower market demand and target bookings levels and had been building backlog levels up moderately throughout the second half of the year and the 2021 first quarter. Given the strong bookings in the fourth and first quarters, and backlog levels at historic highs, higher build rates at first appeared reasonable for 2021, but as a result of continuing supply chain and logistics constraints the Company has not achieved even the production levels originally planned for the 2021 first quarter. These production headwinds are expected to continue to present significant challenges for production in the second and third quarters of 2021, although the Company is hopeful that these challenges will abate and production levels will be able to be increased above previously planned rates in the second half of the year. Significant material cost inflation and higher freight costs are also expected to continue into the second and third quarters, and the non-renewal of tariff exclusions is also expected to affect the cost of components in the second half of 2021. The Company has announced and implemented price increases to moderate the effect of material cost inflation but many of the orders in the backlog do not reflect these price increases. As a result, the Company expects to experience margin pressure throughout 2021 due to the lag between when price increases went into effect and when they are fully realized since customer orders in the backlog are generally price protected. The Company will continue to work closely with suppliers to advance component supply levels and increase its production levels. The Company anticipates that commodity costs will continue to increase as the year progresses, although these costs, particularly for steel, remain volatile and sensitive to changes in the global economy and to tariffs. The Company will continue to monitor potential future supply costs and tariffs closely and adjust pricing accordingly. Despite the above factors, the Company expects operating profit and net income in the second quarter of 2021 to be significantly higher than the very low second-quarter 2020 and first-quarter 2021 results as supply chain constraints are expected to moderate modestly. This increase in expected operating profit would be the result of expected increased unit shipments and an anticipated favorable currency impact based on current currency rates partially offset by expected material and freight cost inflation, as well as the elimination of certain cost containment measures, including the reinstatement of incentive compensation plans in 2021 that were suspended in 2020. While the Company's expectations for the 2021 second quarter have been based on the most recent information available, past quarters have shown that the effects of the pandemic on the economic and lift truck market environments can change expectations rapidly. Further shutdowns or supplier shortages could occur. Lockdown measures are still in place in a number of 28 Table of Contents European countries to mitigate the spread of the COVID-19 virus, and similar actions could be taken by other countries. At this time, the lockdown measures in place have not required closure of the Company's plants. The Company is monitoring this situation, including by closely monitoring a number of suppliers based in areas where COVID-19 cases are high. Hyster-Yale is prepared to take further action if necessary to maintain the health and safety of its global employees and to address additional production and supply chain issues which may develop. More broadly, as a result, pandemic-related uncertainty and its effect on the supply chain continue to limit the Company's ability to forecast bookings and shipment levels for the remaining 2021 quarters. Looking to the future, in the context of an improving bookings trend, the Company expects to increase its investment in working capital and other expenditures to support growth in its business. Capital expenditures are expected to be approximately $68 million in 2021. While the Company expects to make these substantial additional investments in the business during 2021, maintaining liquidity also continues to be a priority. At March 31, 2021, the Company's cash on hand was $103.0 million and debt was $285.4 million compared with cash on hand of $151.4 million and debt of $289.2 million at December 31, 2020. In addition, as of March 31, 2021, the Company had unused borrowing capacity of approximately $265.3 million under existing revolving credit facilities, compared with $266.4 million at December 31, 2020. Despite the potential volatility of near-term economic activity, the Company continues to execute its long-term strategy by focusing on advancing its key strategic initiatives. Collectively, the key projects underlying its strategic initiatives are expected to have a transformational impact on the Company’s competitiveness, market position and economic performance. While essentially all of the projects required to execute these initiatives continue to move forward, in the context of the COVID-19 pandemic, the pace of certain projects has been given greater emphasis than others. In addition, certain accelerated projects have experienced delays as a result of the impact of pandemic-related challenges. At Lift Truck, product projects are expected to lay the groundwork for enhanced market position by providing lower cost of ownership and enhanced productivity for the Company’s customers. While the Company continues to introduce a number of new products during this period, the primary focus is on a new set of modular and scalable product families covering both internal combustion engine and electric trucks designed to provide customers with enhanced flexibility for meeting their application needs in addition to the benefit of lowest total cost of ownership. The introduction of the first of these new modular products, the standard version of the 2-to-3 ton internal combustion engine lift truck for the EMEA market, was launched in April 2021. These new EMEA trucks have been very well-received and the launch of this new range of the 2-to-3 ton counterbalanced trucks to other markets is expected to continue throughout 2021 and the early part of 2022. The introduction of these new products has led to, and will continue to lead to, significant changes in supply chain sourcing and in the Company’s various manufacturing facilities around the world as certain products are moved between plants. Consolidated component volume sourced globally from reliable partners is expected to reduce long-term costs and improve quality as these new products are brought to market over time. Lift Truck’s largest manufacturing facilities, its Berea, Craigavon and Fuyang plants, are undergoing significant changes to accommodate these new products and significant investments are being made to expand the Berea and Craigavon plants. Further, the Company has accelerated plans to move certain production locations to provide permanent structural changes designed to reduce costs and optimize its manufacturing footprint. The Company believes the modular nature of the new products being introduced will enhance its ability to meet customer needs at the lowest cost, and with more specificity, both at the industry level and at the individual customer level. To capitalize on this capability, the Company has accelerated its focus on implementing comprehensive industry strategies and investing in industry-focused sales capabilities to support its dealers. Given the COVID-19 environment, the Company has also focused on enhancing its remote selling capabilities through technology and IT enhancements. Bolzoni continues to focus on implementing its "One Company - 3 Brands" organizational approach to help streamline corporate operations and strengthen its North America and JAPIC commercial operations. Bolzoni is also focused on increasing its Americas business and strengthening its ability to serve industries in the North America market by introducing a broader range of locally produced attachments with shorter lead times to serve its customer base and through continuing to sell cylinders and various other components produced in its Sulligent, Alabama plant. Nuvera continues to focus on serving heavy-duty applications, particularly bus and truck applications, with its 45kW and 60kW engines, which were both released for sale late in 2020. As a result of these milestones, Nuvera has accelerated the 45kW and 60kW engine commercialization operations for the global market and is focusing on ramping up demonstrations, quotes and bookings of these products in 2021. Nuvera also continues to focus on the forklift truck market. The Company believes it is at an inflection point in its businesses as a result of the momentum of its strategic projects as they move to full implementation. While these initiatives may reduce the Company's near-term financial results, they are expected to position the Company with enhanced market position as market and component supply conditions return to more normal levels. 29 Table of Contents Nevertheless, the Company recognizes that the timing and shape of the market recovery remains uncertain, and it will continue to maintain its contingency plans which are designed to respond appropriately and with agility to changing conditions. Once the COVID-19 pandemic and its resulting effects have abated and markets have returned to normal, the Company believes the full impact of these projects will lead to significant profitability improvements for a number of years into the future. In summary, the Company's strategy for the longer term is clear and transformative. Key projects, as well as explicit objectives for Lift Truck, Bolzoni and Nuvera businesses, support this long-term strategy, but nearer-term prospects, particularly in 2021, are uncertain as a result of a number of abnormal, largely external, influences. These influences include the direct impact of the COVID-19 pandemic on some markets, suppliers' manufacturing levels around the world and logistics issues, which collectively create supply and cost challenges, as well as the timing of adoption rates for key fuel cell market segments. Importantly, however, the Company has a record lift truck backlog and a strong current booking environment. Future increased shipment opportunities are very significant. However, when these increases will occur, given the supply and logistics challenges, is difficult to forecast. EFFECTS OF FOREIGN CURRENCY The Company operates internationally and enters into transactions denominated in foreign currencies. As a result, the Company is subject to the variability that arises from exchange rate movements. The effects of foreign currency fluctuations on revenues, operating profit and net income are addressed in the previous discussions of operating results. See also Item 3, "Quantitative and Qualitative Disclosures About Market Risk,” in Part I of this Quarterly Report on Form 10-Q. FORWARD-LOOKING STATEMENTS The statements contained in this Form 10-Q that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are made subject to certain risks and uncertainties, which could cause actual results to differ materially from those presented. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Among the factors that could cause plans, actions and results to differ materially from current expectations are, without limitation: (1) delays in delivery, and other supply chain disruptions, or increases in costs, including materials and transportation costs, shortages, the imposition of tariffs, or the renewal of tariff exclusions, of raw materials or sourced products and labor or changes in or unavailability of quality suppliers, (2) the duration and severity of the COVID-19 pandemic, any preventive or protective actions taken by governmental authorities, the effectiveness of actions taken globally to contain or mitigate its effects, and any unfavorable effects of the COVID-19 pandemic on either the Company's or its suppliers plants' capabilities to produce and ship products if COVID-19 continues to spread or quarantines are re-established, (3) reduction in demand for lift trucks, attachments and related aftermarket parts and service on a global basis, including any reduction in demand as a result of a COVID-19 triggered economic recession, (4) the ability of the Company and its dealers, suppliers and end-users to access credit in the current economic environment, or obtain financing at reasonable rates, or at all, as a result of current economic and market conditions, (5) delays in manufacturing and delivery schedules, (6) the successful commercialization of Nuvera's technology, (7) customer acceptance of pricing, (8) the political and economic uncertainties in the countries where the Company does business, (9) exchange rate fluctuations and monetary policies and other changes in the regulatory climate in the countries in which the Company operates and/or sells products, (10) bankruptcy of or loss of major dealers, retail customers or suppliers, (11) customer acceptance of, changes in the costs of, or delays in the development of new products, (12) introduction of new products by, or more favorable product pricing offered by, competitors, (13) product liability or other litigation, warranty claims or returns of products, (14) the effectiveness of the cost reduction programs implemented globally, including the successful implementation of procurement and sourcing initiatives, (15) changes mandated by federal, state and other regulation, including tax, health, safety or environmental legislation, and (16) unfavorable effects of geopolitical and legislative developments on global operations, including without limitation the entry into new trade agreements and the imposition of tariffs and/or economic sanctions.