What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-01 compared with 2023-05-02 · 185 added, 113 removed, 199 unchanged (60% of the section changed)

20 unchanged sentences

The results of operations for the Company were as follows:

THREE MONTHS ENDED Favorable / (Unfavorable)

2023 2022 % Change

THREE MONTHS ENDED Favorable / (Unfavorable) SIX MONTHS ENDED Favorable / (Unfavorable)

JUNE 30 JUNE 30

2023 2022 % Change 2023 2022 % Change

Lift truck unit shipments (in thousands)

8 unchanged sentences

Bolzoni 96.6 86.4 11.8 % 195.2 181.5 7.5 %

Nuvera 1.6 0.6 n.m.

Nuvera 1.0 0.3 233.3 % 2.6 0.9 188.9 %

Eliminations (45.7) (37.6) 21.5 % (95.3) (84.8) 12.4 %

$ 1,090.6 $ 895.4 21.8 % $ 2,089.9 $ 1,723.0 21.3 %

THREE MONTHS ENDED Favorable / (Unfavorable)

2023 2022 % Change

THREE MONTHS ENDED Favorable / (Unfavorable) SIX MONTHS ENDED Favorable / (Unfavorable)

JUNE 30 JUNE 30

2023 2022 % Change 2023 2022 % Change

Americas $ 143.4 $ 66.1 116.9 % $ 264.6 $ 133.1 98.8 %

5 unchanged sentences

Eliminations 0.1 0.5 n.m.

0.3 (1.1) n.m.

$ 197.9 $ 99.1 99.7 % $ 372.3 $ 200.3 85.9 %

9 unchanged sentences

Americas $ 65.2 $ 3.1 n.m.

$ 112.7 $ 7.5 n.m.

EMEA 1.1 (10.8) n.m.

3.7 (22.2) n.m.

JAPIC (3.8) (4.0) 5.0 % (6.1) (7.7) 20.8 %

Lift truck business 62.5 (11.7) n.m.

110.3 (22.4) n.m.

Bolzoni 5.4 3.4 58.8 % 9.8 5.5 78.2 %

2 unchanged sentences

0.3 (1.1) n.m.

$ 58.8 $ (15.7) n.m.

$ 101.4 $ (34.0) n.m.

Interest expense $ 8.4 $ 6.1 (37.7) % $ 18.6 $ 11.2 (66.1) %

Other (income) expense $ (3.5) $ (2.1) 66.7 %

Other (income) expense $ (0.4) $ — n.m.

$ (3.9) $ (2.1) 85.7 %

Net income (loss) attributable to stockholders $ 38.3 $ (19.4) n.m.

$ 64.9 $ (44.4) n.m.

Diluted earnings (loss) per share $ 2.21 $ (1.15) n.m.

$ 3.76 $ (2.63) n.m.

Reported income tax rate 23.6 % 14.2 % 23.9 % 0.5 %

1 unchanged sentence

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.

"Other adjustments" in the first quarter of 2022 below represents suspended orders for which the Company has no defined plans to fulfill.

As of March 31, 2023, unit backlog excludes 2,600 of these orders.

As of March 31, 2023, substantially all of the Company's backlog is expected to be sold within the next twelve months.

THREE MONTHS ENDED

"Other adjustments" in the first six months of 2022 below represents suspended orders for which the Company has no defined plans to fulfill.

As of June 30, 2023, unit backlog excludes 2,500 of these suspended orders.

As of June 30, 2023, substantially all of the Company's backlog is expected to be sold within the next twelve months.

THREE MONTHS ENDED SIX MONTHS ENDED

JUNE 30 JUNE 30

2023 2022 2023 2022

Unit backlog, beginning of period 99.2 114.1 102.1 105.3

5 unchanged sentences

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

THREE MONTHS ENDED SIX MONTHS ENDED

JUNE 30 JUNE 30

2023 2022 2023 2022

Bookings, approximate sales value $ 680 $ 760 $ 1,370 $ 1,710

Backlog, approximate sales value $ 3,610 $ 3,530 $ 3,610 $ 3,530

First Quarter of 2023 Compared with First Quarter of 2022

The following table identifies the components of change in revenues for the first quarter of 2023 compared with the first quarter of 2022:

Second Quarter of 2023 Compared with Second Quarter of 2022

The following table identifies the components of change in revenues for the second quarter of 2023 compared with the second quarter of 2022:

HY Americas EMEA JAPIC

1 unchanged sentence

Increase (decrease) in 2023 from:

Price 74.3 45.3 27.7 1.3

Unit volume and product mix 91.8 116.6 (10.4) (14.4)

Price 77.9 51.3 25.4 1.2

Parts 32.0 29.3 2.7 —

Other 4.8 3.3 1.0 0.5

Bolzoni revenues 10.2 — — —

Nuvera revenues 0.7 — — —

Eliminations (8.1) — — —

Foreign currency (3.2) (1.1) (0.2) (1.9)

Other (6.1) (4.2) (1.7) (0.2)

2023 $ 1,090.6 $ 788.5 $ 200.6 $ 49.6

Revenues increased 21.8% to $1,090.6 million in the second quarter of 2023 from $895.4 million in the second quarter of 2022.

The increase in Lift Truck revenues was primarily due to higher unit and parts volumes, mainly in the Americas and improved pricing in all geographic regions.

The improvement in revenue was partially offset by a decline in unit shipments in EMEA and JAPIC.

Bolzoni revenues increased in the second quarter of 2023 compared with the second quarter of 2022 mainly from higher volume and pricing.

The following table identifies the components of change in operating profit (loss) for the second quarter of 2023 compared with the second quarter of 2022:

Operating Profit (Loss)

HY Americas EMEA JAPIC

2022 $ (15.7) $ 3.1 $ (10.8) $ (4.0)

Increase (decrease) in 2023 from:

Lift truck gross profit 95.3 77.3 15.8 2.6

Lift truck selling, general and administrative expenses (21.5) (15.2) (3.9) (2.4)

Bolzoni operations 2.0 — — —

Nuvera operations (1.3) — — —

2023 $ 58.8 $ 65.2 $ 1.1 $ (3.8)

The Company recognized an operating profit of $58.8 million in the second quarter of 2023 compared with an operating loss of $15.7 million in the second quarter of 2022.

The increase in Lift Truck operating profit was primarily due to improved gross profit from higher pricing of $77.9 million, mainly in the Americas and EMEA, a shift in sales to higher margin lift trucks and higher unit and parts sales compared with the second quarter of 2022.

These items were partially offset by higher selling, general and administrative expenses for increased employee-related costs, including incentive compensation.

Operating profit in the Americas increased primarily due to improved gross profit from higher pricing of $51.3 million, a shift in sales to higher margin lift trucks, higher unit and parts sales, as well as favorable material costs, partially offset by higher selling, general and administrative expenses related to higher employee costs, including incentive compensation.

EMEA recognized operating profit of $1.1 million in the second quarter of 2023 compared with an operating loss of $10.8 million in the second quarter of 2022, primarily from higher gross profit from improved pricing of $25.4 million, partially offset by manufacturing inefficiencies and higher selling, general and administrative expenses.

Bolzoni's operating profit increased to $5.4 million in the second quarter of 2023 compared with $3.4 million in the second quarter of 2022 due to higher gross profit from improved pricing and higher sales volume.

The Company recognized net income attributable to stockholders of $38.3 million in the second quarter of 2023 compared with a net loss of $19.4 million in the second quarter of 2022.

The improvement was primarily the result of higher operating profit (loss), partially offset by higher income taxes and interest expense.

See Note 5 of the Company's condensed consolidated financial statements for further discussion of the Company's income tax provision.

First Six Months of 2023 Compared with First Six Months of 2022

The following table identifies the components of change in revenues for the first six months of 2023 compared with the first six months of 2022:

HY Americas EMEA JAPIC

2022 $ 1,723.0 $ 1,154.3 $ 354.5 $ 116.6

Increase (decrease) in 2023 from:

Unit volume and product mix 164.4 167.9 16.9 (20.4)

Price 152.2 96.6 53.1 2.5

Parts 64.1 56.7 5.5 1.9

Bolzoni revenues 13.7 — — —

Nuvera revenues 1.7 — — —

Foreign currency (17.4) (0.2) (13.8) (3.4)

Eliminations (10.5) — — —

Other (1.3) (0.9) (0.7) 0.3

2023 $ 2,089.9 $ 1,474.4 $ 415.5 $ 97.5

Revenues increased 20.7% to $999.3 million in the first quarter of 2023 from $827.6 million in the first quarter of 2022.

The increase in Lift Truck revenues was primarily due to improved pricing and higher unit and parts volumes, mainly in the Americas and EMEA.

The improvement in revenue was partially offset by unfavorable currency movements, primarily in EMEA, from the translation of sales into U.S.

The following table identifies the components of change in operating profit (loss) for the first quarter of 2023 compared with the first quarter of 2022:

Revenues increased 21.3% to $2,089.9 million in the first six months of 2023 from $1,723.0 million in the first six months of 2022.

The increase was primarily due to higher unit and parts volume in the Americas, improved pricing and a shift in sales to higher-priced lift trucks in the Americas and EMEA.

The following table identifies the components of change in operating profit for the first six months of 2023 compared with the first six months of 2022:

Operating Profit (Loss)

7 unchanged sentences

2023 $ 101.4 $ 112.7 $ 3.7 $ (6.1)

The Company recognized an operating profit of $42.6 million in the first quarter of 2023 compared with an operating loss of $18.3 million in the first quarter of 2022.

The increase in Lift Truck operating profit was primarily due to improved gross profit from higher pricing of $74.3 million, mainly in the Americas and EMEA, a shift in sales to higher margin lift trucks and favorable parts sales compared with the first quarter of 2022.

These items were partially offset by material cost increase of $20.9 million, higher selling, general and administrative expenses for increased employee-related costs, including incentive compensation, as well as marketing and product development and unfavorable currency of $5.2 million.

Operating profit in the Americas increased primarily due to improved gross profit from higher pricing of $45.3 million, a shift in sales to higher margin lift trucks and favorable parts sales and manufacturing efficiencies tied to higher production volumes, partially offset by material cost inflation, higher selling, general and administrative expenses and unfavorable currency.

EMEA recognized operating profit of $2.6 million in the first quarter of 2023 compared with an operating loss of $11.4 million in the first quarter of 2022, primarily from improved gross profit from improved pricing of $27.7 million favorable sales mix and lower manufacturing costs, partially offset by material cost inflation and unfavorable currency.

The Company recognized net income attributable to stockholders of $26.6 million in the first quarter of 2023 compared with a net loss of $25.0 million in the first quarter of 2022.

The improvement was primarily the result of higher operating profit, partially offset by higher income taxes and interest expense.

The Company recognized an operating profit of $101.4 million in the first six months of 2023 compared with an operating loss of $34.0 million in the first six months of 2022.

The increase in Lift Truck operating profit was primarily due to improved gross profit from higher pricing of $152.2 million, mainly in the Americas and EMEA, and a shift in sales to higher margin lift trucks and higher unit and parts sales compared with the first six months of 2022.

These items were partially offset by higher selling, general and administrative expenses for increased employee-related costs, including incentive compensation.

Operating profit in the Americas increased primarily due to improved gross profit from higher pricing of $96.6 million, a shift in sales to higher margin lift trucks and increased unit and parts sales, partially offset by higher selling, general and administrative expenses, related to higher employee costs, including incentive compensation.

EMEA's operating profit improved mainly due to improved gross profit from improved pricing of $53.1 million, partially offset by material cost inflation and manufacturing inefficiencies.

JAPIC's operating loss improved to $6.1 million in the first six months of 2023 from $7.7 million in the first six months of 2022, primarily due to higher gross profit from a shift in mix to higher-margin products and price increases, partially offset by higher selling, general and administrative expenses for increased employee-related costs and marketing programs.

Bolzoni's operating profit increased to $9.8 million in the first six months of 2023 compared with $5.5 million in the first six months of 2022 due to higher gross profit from a shift in mix to higher-margin products and higher volume, partially offset by material cost inflation.

Nuvera's operating loss increased to $19.0 million in the first six months of 2023 compared with $16.0 million in the first six months of 2022 primarily from higher selling, general and administrative expenses for increased employee-related costs, including incentive compensation, and product development.

The Company recognized net income attributable to stockholders of $ 64.9 million in the first six months of 2023 compared with a net loss of $ 44.4 million in the first six months of 2022.

The improvement was primarily the result of the factors affecting operating profit (loss), partially offset by higher income taxes and interest expense.

See Note 5 of the Company's condensed consolidated financial statements for further discussion of the Company's income tax provision.

LIQUIDITY AND CAPITAL RESOURCES

The following tables detail the changes in cash flow for the three months ended March 31:

The following tables detail the changes in cash flow for the six months ended June 30:

2023 2022 Change

16 unchanged sentences

Cash flow before financing activities $ 32.9 $ (22.7) $ 55.6

Net cash provided by operating activities changed $50.1 million in the first three months of 2023 compared with the first three months of 2022, primarily as a result of changes in working capital items partially offset by net income.

The changes in working capital were mainly due to a decrease in customer deposits received related to down payments on orders and a smaller increase in accounts payable in the first three months of 2023 compared with the first three months of 2022.

The change in net cash used for investing activities during the first three months of 2023 compared with the first three months of 2022 was due to lower capital expenditures and the purchase of Bolzoni's noncontrolling interest in 2023.

Net cash provided by operating activities increased $44.6 million in the first six months of 2023 compared with the first six months of 2022, primarily as a result of higher net income and non-cash adjustments for stock compensation and currency translation partially offset by changes in working capital items.

The changes in working capital were mainly due to a decrease in customer deposits received related to down payments on orders partially offset by a smaller increase in accounts receivable in the first six months of 2023 compared with the first six months of 2022.

The change in net cash used for investing activities during the first six months of 2023 compared with the first six months of 2022 was due to the purchase of Bolzoni's noncontrolling interest in 2023 compared with the first installment purchase of the noncontrolling interest of Hyster-Yale Maximal Forklift (Zhejiang) Co., Ltd.

in 2022 and lower capital expenditures.

2023 2022 Change

3 unchanged sentences

Other (0.7) — (0.7)

Net cash used for financing activities $ (2.5) $ (50.9) $ 48.4

The change in net cash used for financing activities was primarily due to additional borrowings during the first three months of 2023 versus repayments in the first three months of 2022.

Net cash provided by (used for) financing activities $ (28.9) $ 33.5 $ (62.4)

The change in net cash used for financing activities was primarily due to repayments of debt in the first six months of 2023 compared with additional borrowings during the first six months of 2022.

Financing Activities

The Company has a $325.0 million secured, floating-rate revolving credit facility (the "Facility") that expires in June 2026 and a $225.0 million term loan (the "Term Loan"), which matures in May 2028.

The Facility was amended in the second quarter of 2023 for the purpose of, among other items, (i) establishing a new tranche of revolving loans with aggregate commitments of $25.0 million under the Facility and (ii) changing the benchmark interest rate for U.S.

dollar-denominated borrowings under the Facility from LIBOR to Term SOFR, each as defined in the Facility.

The Term Loan was amended in the second quarter of 2023 for the purpose of changing the benchmark interest rate for borrowings under the Term Loan from LIBOR to Term SOFR,

each as defined in the Facility.

See Note 10 of the Company's condensed consolidated financial statements for further discussion.

The Facility can be increased up to $400.0 million over the term of the Facility in minimum increments of $10.0 million, subject to approval by the lenders.

The obligations under the Facility are generally secured by a first priority lien on working capital assets of the borrowers and guarantors in the Facility, which includes but is not limited to cash and cash equivalents, accounts receivable and inventory, and a second priority lien on the present and future shares of capital stock, fixtures and general intangibles consisting of intellectual property.

The approximate book value of assets held as collateral under the Facility was $1.2 billion as of March 31, 2023.

The approximate book value of assets held as collateral under the Facility was $1.2 billion as of June 30, 2023.

The Facility includes restrictive covenants, which, among other things, limit additional borrowings and investments of the Company subject to certain thresholds, as provided in the Facility.

1 unchanged sentence

The Facility also requires the Company to achieve a minimum fixed charge coverage ratio when total excess availability is less than the greater of 10% of the total borrowing base, as defined in the Facility, and $20.0 million.

At March 31, 2023, the Company was in compliance with the covenants in the Facility.

Key terms of the Facility as of March 31, 2023 were as follows:

At June 30, 2023, the Company was in compliance with the covenants in the Facility.

The new $25.0 million tranche will terminate on May 1, 2024 unless otherwise terminated prior to such date by the Company in accordance with the terms of the Facility.

Commencing December 1, 2023, the new $25.0 million tranche will amortize on a monthly basis in the amount of $4.2 million per month.

Key terms of the Facility as of June 30, 2023 were as follows:

borrowing capacity $ 235.0

3 unchanged sentences

Availability $ 189.6

FILO LOANS LOANS OTHER THAN FILO LOANS

Applicable margins, as defined in agreement

base rate loans 0.25% to 0.75%

LIBOR, EURIBOR and foreign base rate loans 1.25%-1.75%

base rate loans 2.25%

0.25% to 0.75%

SOFR, EURIBOR and foreign base rate loans 3.25%

1.25% to 1.75%

SOFR adjustment, as defined in agreement 0.10%

Applicable margins, for amounts outstanding

base rate and LIBOR loans 0.50%;

base rate and LIBOR loans 1.50%

base rate and SOFR loans — 0.50%;

base rate and SOFR loans 3.25%

Applicable interest rate, for amounts outstanding

base rate 8.50%

LIBOR 6.20% to 6.31%

SOFR 8.44 % 6.77%

EURIBOR — 4.40%

3 unchanged sentences

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 and a second priority lien on working capital assets of the borrowers and guarantors of the Facility, which includes, but is not limited to cash and cash equivalents, accounts receivable and inventory.

The approximate book value of assets held as collateral under the Term Loan was $800 million as of March 31, 2023.

The approximate book value of assets held as collateral under the Term Loan was $800 million as of June 30, 2023.

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 dividends and other restricted payments the Company may make in any fiscal year, unless the consolidated total net leverage ratio, as defined in the Term Loan, does not exceed 2.50 to 1.00 at the time of the payment.

At March 31, 2023, the Company was in compliance with the covenants in the Term Loan.

Key terms of the Term Loan as of March 31, 2023 were as follows:

At June 30, 2023, the Company was in compliance with the covenants in the Term Loan.

Key terms of the Term Loan as of June 30, 2023 were as follows:

Outstanding $ 220.5

3 unchanged sentences

base rate loans 2.50%

Eurodollar 3.50%

Eurodollar floor 0.50%

SOFR adjustment, as defined in agreement 0.11%

SOFR floor 0.50%

Applicable interest rate, for amounts outstanding 8.72%

The Company had other debt outstanding, excluding finance leases, of approximately $188.5 million at March 31, 2023.

The Company had other debt outstanding, excluding finance leases, of approximately $170.4 million at June 30, 2023.

In addition to the excess availability under the Facility of $189.6 million, the Company had remaining availability of $25.9 million related to other non-U.S.

revolving credit agreements at March 31, 2023.

revolving credit agreements at June 30, 2023.

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 June 2026.

3 unchanged sentences

The following table summarizes actual and planned capital expenditures:

Three Months Ended March 31, 2023 Planned for Remainder of 2023 Planned 2023 Total Actual 2022

Six Months Ended June 30, 2023 Planned for Remainder of 2023 Planned 2023 Total Actual 2022

Lift truck business $ 7.5 $ 44.1 $ 51.6 $ 20.3

17 unchanged sentences

Market Commentary

The global economic outlook remains constrained and economic activity appears to be decelerating in many parts of the world.

This deceleration is due to several factors, including tight monetary policies, designed to contain inflation, in many countries, continued supply chain disruptions and the likelihood of increased unemployment rates as companies reduce expenses.

Despite these challenges, the U.S.

economy was more resilient in the 2023 first quarter than anticipated after a fourth quarter that included signs of a steeper potential downturn.

The latest publicly available lift truck market data indicates that new unit, fourth-quarter 2022 booking activity decreased in all major geographies, particularly EMEA, compared with high prior-year levels.

Internal company estimates suggest that the global lift truck market decline continued in the first quarter of 2023 with all major geographies experiencing booking declines compared with the prior-year quarter.

Despite the decreases, market levels appear to be stronger than anticipated.

Looking ahead, the Company expects the global lift truck market to decline in all regions for the full-year 2023 compared with 2022.

By pre-pandemic historical standards, 2023's global market unit volumes are expected to remain relatively strong in all regions except EMEA.

Several years of extraordinary lift truck market growth led to very significant supplier capacity constraints.

A moderate market slowdown could put the lift truck component supply base in a position to meet their supply requirements more efficiently and effectively and allow the Company to work down its extended backlog more quickly.

The global economic outlook remains uncertain with continuing moderating activity in certain parts of the world, including EMEA.

This weakness is due to tight monetary policies designed to contain inflation and labor market shortages, among other factors.

Despite these challenges, the deceleration in the U.S.'s economy and lift truck market has been more moderate than previously predicted.

The latest publicly available lift truck market data indicates that new unit, first-quarter 2023 booking activity decreased in all major geographies compared with strong prior-year levels but was still ahead of pre-pandemic volumes.

Internal company estimates suggest that the global lift truck market decline accelerated in the second quarter of 2023, with all major geographies experiencing booking declines compared with the prior year.

Looking ahead, the Company continues to expect a full-year 2023 lift truck market decline in all regions compared with 2022.

This decline is anticipated to accelerate in the second half of 2023 compared with the first half in all markets.

However, 2023's market unit volumes are projected to remain reasonably strong in most regions compared with pre-pandemic levels.

Consolidated Strategic Perspective

The Company believes the improving 2023 results are due to actions taken since the COVID-19 pandemic began, implementation of key strategies and projects and significant process improvements made over the past few years, all of which position the Company for substantial longer-term growth.

The Company believes its more mature Lift Truck and Bolzoni businesses are the foundation for this improvement, while the Nuvera business has substantial growth prospects that have yet to be realized.

Operational Perspectives - Lift Truck Business

First-quarter 2023 lift truck bookings decreased significantly from robust prior-year levels due to several factors, including a declining, but still large, global market and a focus on booking orders with strong margins in the context of the Company's extended lead times.

First-quarter 2023 bookings increased moderately from fourth-quarter 2022 driven by better-than-expected market conditions and bookings performance in the Americas.

Looking forward, 2023 bookings' levels are expected to decrease year-over-year due to the moderating market outlook and the Company’s continued focus on balancing higher-margin units with the need to maintain a full production pipeline for each of its product lines across its facilities.

Together, the anticipated bookings' decreases and planned production increases should help the Company further reduce its backlog, which has now decreased over 13% from its peak in the first-quarter 2022.

Full-year 2023 production and shipment volumes are expected to increase compared with 2022, reducing extended lead times as a result of anticipated reduced bookings and continued supply chain improvements.

Despite the lower booking rate and expected production improvements, lead times and backlog levels will likely remain above desired levels for some time.

However, this extended backlog should serve as a shock absorber for the business if bookings decline more sharply as 2023 progresses.

The trend toward higher average prices and margins for both unit bookings and backlog continued in the first quarter largely due to enhanced pricing and order selectivity.

The Company continues to experience material and labor cost increases, but the rate of increase has slowed substantially.

Forward economic indicators suggest inflationary pressures are abating and cost inflation is expected to moderate throughout 2023.

To offset the substantial inflationary pressure that occurred in 2021 and 2022, the Lift Truck business implemented several price increases.

As of March 31, 2023, the Company has worked through a high proportion of its lower-priced, lower-margin backlog units booked before these price increases went into effect.

In 2023, the Company expects a positive price-to-cost ratio, in part to address ongoing cost increases in certain areas.

The Company will continue to monitor material and labor costs closely, as well as the impact of tariffs, and adjust forward pricing accordingly.

As a result of slowing cost inflation and the current higher-priced backlog, the Company believes average unit margins will increase significantly in aggregate in 2023 compared to 2022.

That improvement is expected to continue into 2024 as newer bookings, with higher margins, are scheduled for production.

The factors outlined above, as well as the benefits from the Company's maturing strategic initiatives, are expected to lead to a significant revenue increase and a substantial operating profit in 2023.

The Lift Truck business first-quarter 2023 operating profit increased more than the Company anticipated.

However, second-quarter 2023 Lift Truck operating profit is expected to decrease compared with first-quarter 2023 but significantly exceed fourth-quarter 2022 results.

The expected decrease in the second quarter from first-quarter 2023 is due in part to an expected shift in mix toward lower margin sales channels.

Second-half 2023 operating profit is expected to be comparable to the first half of the year.

However, these forecasts are highly sensitive to the effect of various factors, particularly those that impact global supply chains and production capabilities.

Second-quarter 2023 lift truck bookings decreased moderately from first-quarter 2023 and prior-year levels due to several factors, including a healthy, but declining, global market and a continued focus on booking orders with strong margins.

Despite the bookings decrease, market share improved compared to the prior year.

Looking forward, second-half 2023 booking levels are projected to be comparable year-over-year due to a steadier-than-expected market and anticipated market share gains.

Full-year 2023 bookings are forecasted to decline compared with full-year 2022.

Production and shipment volumes are anticipated to continue to increase in second-half 2023 compared with the prior year period.

The Company expects its extended backlog to continue trending lower toward more normal levels over time as planned production rates increase and given bookings expectations.

At the end of second-quarter 2023, the backlog of nearly 93,000 units was down 19% from its peak in the first-quarter 2022.

Lead times and backlog levels will likely remain above desired levels for some time.

However, this extended backlog, valued at $3.6 billion, which is almost a full year of revenue, should serve as a shock absorber for the business if bookings decline more rapidly.

The trend of higher average unit booking and backlog prices and margins continued in the second quarter largely due to order selectivity and enhanced pricing to offset prior years' inflation.

Although certain material and labor cost increases continue, the

rate of increase has slowed substantially, particularly in the Americas.

Forward economic indicators suggest inflationary pressures will stabilize throughout the second half of 2023.

As of June 30, 2023, the Company has worked through essentially all of its lower-priced, lower-margin backlog units booked before price increases implemented in 2021 and 2022 went into effect.

In the second half of 2023, the Company expects to maintain an improved price-to-cost ratio, in part to address projected cost increases in certain categories and geographies.

The Company continues to monitor material and labor costs closely, as well as the impact of tariffs and competition, and will adjust forward pricing accordingly.

As a result of stabilizing cost inflation and the higher-priced truck production, the Company believes average unit margins will continue to increase in the second half of 2023 compared with the prior year period.

This improvement is anticipated to continue into the beginning of 2024 as newer bookings with higher margins are scheduled for production.

The factors outlined above, as well as the benefits from the Company's maturing strategic initiatives, are expected to lead to significant increases in revenue and operating profit in second-half 2023 compared with the respective prior year period.

Operating profit in the third quarter is expected to decrease from the strong second-quarter results due to normal business seasonality combined with ongoing EMEA production challenges and an anticipated mix shift toward lower margin sales channels.

Fourth-quarter 2023 results are expected to increase meaningfully over the third quarter, due in part to anticipated improvements in EMEA and the absence of planned production outages.

However, these forecasts are highly sensitive, in particular to the impact of global supply chain adjustments and production capabilities.

Strategic Perspectives - Lift Truck

From a broad perspective, the Lift Truck business has three core strategies that are expected to transform the Company’s competitiveness, market position and economic performance over time:

• To provide the lowest cost of ownership while improving customer productivity, including for low-intensity applications.

• Provide the lowest cost of ownership while improving customer productivity, including for low-intensity applications.

The Lift Truck business' capabilities in this area are expected to be enhanced by bringing to market a wide variety of vehicle innovations including:

new modular and scalable product families, truck electrification projects and technology advancements in product automation, power options, telemetry and operator assist systems;

new modular and scalable product families, truck electrification projects and technology advancements in vehicle automation, power options and operator assist systems;

• Be the leader in the delivery of industry- and customer-focused solutions by transforming the Company's sales approach to meet a wide variety of customer needs across a broad set of end markets;

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The Company continues to make progress on its high priority projects.

The Lift Truck business launched its first modular, scalable lift trucks to the EMEA and Americas markets in 2022.

The Lift Truck business launched its heart-of-the-line modular, scalable lift trucks in the EMEA and Americas markets in 2022.

Given the current extended backlog, the production ramp-up for this new product line is occurring gradually.

The Company expects to launch these products in the JAPIC market in mid-to-late 2023.

In addition to the new modular, scalable product lines, the Lift Truck business also has key projects geared toward electrification of applications now dominated by internal combustion engine trucks, as well as technology advancements in power options, automation product options, telemetry and operator assist systems.

The Company plans to launch these models in the JAPIC market in the second half of 2023.

These products are expected to help reduce supply chain costs and working capital, and better meet customer needs.

The Lift Truck business has key projects geared toward electrifying trucks used for applications now dominated by internal combustion engine trucks through the use of advancements in electric power options.

The Company also has key projects focused on applying technology advancements in automation product options and operator assist systems.

The Company delivered its first electrified fuel cell Container Handler to the Port of Los Angeles for testing in late 2022.

In the first half of 2023, Lift Truck anticipates delivering an electrified fuel cell Reach Stacker to the Port of Valencia, Spain, and in mid-to-late 2023 delivering a new electrified fuel cell Terminal Tractor and an electrified fuel cell empty container handler to a customer in Hamburg, Germany.

In second-half 2023, the Company anticipates delivering an electrified fuel cell Reach Stacker to the Port of Valencia, Spain, and delivering a new electrified fuel cell Terminal Tractor and an electrified fuel cell empty Container Handler to a customer in Hamburg, Germany.

The Company is also exploring options for other electrification projects within the European Union.

Operational and Strategic Perspectives - Bolzoni

Building on its first-quarter 2023 performance, over the remainder of 2023 Bolzoni expects component shortages to continue moderating.

Increased pricing is expected to offset higher input costs across 2023.

As a result, margins are expected to improve year-over-year, leading to a significantly higher 2023 full-year operating profit compared with 2022, in large part due to the strong first-quarter 2023 performance.

Bolzoni anticipates a modest decline in revenues in second-half 2023 due to a projected market decline.

As a result, second-half 2023 operating profit is expected to moderate from the strong first-half performance, but significantly exceed the prior-year second half as a result of continuing year-over-year margin improvement.

Bolzoni's core strategy is to be the leader in the attachments business.

In this context, Bolzoni continues to concentrate on driving its "One Company - 3 Brands" approach globally, increasing its Americas business and focusing on strengthening its ability to serve key attachment industries and customers in all global markets.

As part of this approach, Bolzoni also intends to increase its sales, marketing and product support capabilities in North America and Europe to support its industry-specific sales strategy.

As part of this approach, Bolzoni also intends to increase its sales, marketing and product capabilities in North America and Europe to support its industry-specific sales strategy.

Operational and Strategic Perspectives - Nuvera

Nuvera's core strategy is to be a leader in the fuel cell business.

Nuvera continues to focus on placing 45kW and 60kW fuel cell engines in niche, heavy-duty vehicle applications for which battery-only electrification will not provide an adequate solution.

As a result, these applications are expected to have significant and nearer-term fuel cell adoption potential, at the same time that Nuvera is shifting from a product to solution-selling emphasis.

Nuvera has announced several projects with various third parties to test Nuvera ® engines in targeted applications, including the Port of Los Angeles, which began testing in late 2022, and in multiple European ports, which are expected to begin testing in 2023.

Nuvera is also developing a new, larger 125kW fuel cell engine for heavier-duty applications and plans to launch 360kW and 470kW modular fuel cell-powered generators for stationary applications.

In 2023, Nuvera expects continued focus on increasing customer product demonstrations and customer bookings.

Nuvera continues to focus on placing 45kW and 60kW fuel cell engines in heavy-duty vehicle applications for which battery-only electrification does not provide an adequate solution.

As a result, these applications are expected to have significant and nearer-term fuel cell adoption potential.

Nuvera has announced several projects with various third parties to test Nuvera ® engines in targeted applications, including the Port of Los Angeles, which began testing in late 2022, in multiple European ports, which are projected to begin testing in the second half of 2023, in bus applications in China and India and in marine applications in the Netherlands.

Nuvera is also developing a new, larger 125kW fuel cell engine for heavier-duty applications and plans to launch modular fuel cell-powered generators for stationary and mobile applications.

In the second half of 2023, Nuvera plans to continue to focus on increasing customer product demonstrations and customer bookings.

Nuvera is expanding its presence in Europe and China.

Shipments in the first quarter of 2023 were for demonstrations of its 45kW and 60kW fuel cell engines for bus, power supply and port equipment applications.

Recurring orders for current customers are booked for the 2023 second and third quarters and are expected to result in higher sales in the latter half of the year.

Overall, in the context of moderately higher costs, the business is expected to generate a loss in 2023 comparable to 2022 but the increased volume of engine demonstrations should significantly enhance the foundation for future technology adoption and improved financial returns.

Recurring orders from current customers are booked for the period and are expected to result in higher sales compared with the second half of 2022.

The business expects to generate a lower loss in the second half of 2023 compared with the second half of 2022 and first half of 2023 largely due to anticipated higher shipments moderated by increased development and other costs.

The increased volume of engine demonstrations should significantly enhance the foundation for future fuel cell engine technology adoption and improved financial returns.

Consolidated Outlook

The Company is nearing completion of its program to build out the lower-priced, lower-margin backlog units held over from prior periods.

As a result, continued margin expansion is expected to lead to substantial operating profit and net income for the 2023 full year, as well as solid progress toward the Company's 7% operating profit margin goals at both the Lift Truck and Bolzoni businesses.

These expectations are based on the Company's ability to effectively manage its ongoing component and labor costs, increase its production levels and achieve reasonably stable material and freight costs.

The programs to reduce inventory and to generate cash are expected to show substantial progress in the second half of 2023.

The Company is committed to enhancing its cash flows through its ongoing action plans and continued discipline over capital expenditures and operating expenses.

Capital expenditures are expected to be approximately $66 million for full-year 2023, with spending more heavily weighted toward the second half of the year.

This full-year increase compares to significantly restrained 2022 levels and is necessary to adequately maintain the Company’s facilities and product development programs.

Working capital continues to be an area of intense focus for the Company.

Inventory levels remain elevated and above pre-pandemic levels as a result of slow component parts consumption due to prior-period production delays.

Efforts to maximize the use of on-hand inventory, coupled with material purchases below expected production rates, are expected to help reduce excess inventory levels throughout the Company in the remaining 2023 quarters.

Supply constraints continue to be an issue periodically, but the Company expects continued improvements as 2023 progresses.

At the consolidated level, second-half 2023 operating profit and net income are expected to be significantly higher than second-half 2022.

Full-year 2023 margin expansion, led by strong first-half improvements, is expected to generate substantial operating profit and net income for the 2023 full year.

This should drive solid progress toward the Company's 7% operating profit margin and greater than 20% return on capital employed goals at both the Lift Truck and Bolzoni businesses.

These expectations are based on the Company's ability to effectively manage its ongoing component and labor costs and increase its production levels.

The programs to reduce inventory and generate cash are anticipated to show substantial progress in the second half of 2023.

The Company is committed to reducing its leverage and enhancing its cash flows through ongoing action plans and continued discipline over capital expenditures and operating expenses.

Capital expenditures are expected to be approximately $65 million for full-year 2023, with spending more heavily weighted to the second half of the year.

This full-year increase compares to significantly restrained 2022 levels.

Higher expenditures are necessary to adequately maintain the Company’s facilities and product development programs.

Working capital control continues to be an area of intense focus for the Company.

Inventory levels remain elevated and above pre-pandemic levels but are decreasing.

Efforts to maximize the use of on-hand inventory are expected to help reduce excess inventory levels throughout the Company in the 2023 second half.

Supply constraints continue to be an issue periodically, while labor constraints are increasing, causing certain production and inventory usage challenges.

However, the Company anticipates continued inventory improvements over the remainder of the year.

As a result of these actions, the Company expects a significant increase in cash flow before financing activities for the full-year 2023 compared with 2022.

Efforts to make further progress are expected to continue in 2024.

EFFECTS OF FOREIGN CURRENCY

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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 as a result of inflation or otherwise, including materials and transportation costs and shortages, the imposition of tariffs, or the renewal of tariff exclusions, on raw materials or sourced products, and labor, or changes in or unavailability of quality suppliers or transporters, including the impacts of the foregoing risks on the Company's liquidity, (2) delays in manufacturing and delivery schedules, (3) customer acceptance of pricing, (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 interest rate volatility and current economic and market conditions, including inflation, (5) 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 an economic recession, (6) 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, as well as armed conflicts, including the Russia/Ukraine conflict, and their regional effects, (7) exchange rate fluctuations, interest rate volatility and monetary policies and other changes in the regulatory climate in the countries in which the Company operates and/or sells products, (8) the effectiveness of the cost reduction programs implemented globally, including the successful implementation of procurement and sourcing initiatives, (9) the successful commercialization of Nuvera's technology, (10) the political and economic uncertainties in the countries where the Company does business, as well as the effects of any withdrawals from such countries, (11) bankruptcy of or loss of major dealers, retail customers or suppliers, (12) customer acceptance of, changes in the costs of, or delays in the development of new products, (13) introduction of new products by, more favorable product pricing offered by or shorter lead times available through competitors, (14) product liability or other litigation, warranty claims or returns of products, (15) changes mandated by federal, state and other regulation, including tax, health, safety or environmental legislation, (16) the ability to attract, retain, and replace workforce and administrative employees, (17) disruptions resulting from natural disasters, public health crises, political crises or other catastrophic events, and (18) the ability to protect the

Company’s information technology infrastructure against service interruptions, data corruption, cyber-based attacks or network breaches.

access credit in the current economic environment, or obtain financing at reasonable rates, or at all, as a result of interest rate volatility and current economic and market conditions, including inflation, (5) 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 an economic recession, (6) 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, as well as armed conflicts, including the Russia/Ukraine conflict, and their regional effects, (7) exchange rate fluctuations, interest rate volatility and monetary policies and other changes in the regulatory climate in the countries in which the Company operates and/or sells products, (8) the effectiveness of the cost reduction programs implemented globally, including the successful implementation of procurement and sourcing initiatives, (9) the successful commercialization of Nuvera's technology, (10) the political and economic uncertainties in the countries where the Company does business, as well as the effects of any withdrawals from such countries, (11) bankruptcy of or loss of major dealers, retail customers or suppliers, (12) customer acceptance of, changes in the costs of, or delays in the development of new products, (13) introduction of new products by, more favorable product pricing offered by or shorter lead times available through competitors, (14) product liability or other litigation, warranty claims or returns of products, (15) changes mandated by federal, state and other regulation, including tax, health, safety or environmental legislation, (16) the ability to attract, retain, and replace workforce and administrative employees, (17) disruptions resulting from natural disasters, public health crises, political crises or other catastrophic events, and (18) the ability to protect the

Company’s information technology infrastructure against service interruptions, data corruption,

cyber-based attacks or network breaches.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis