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 globally integrated company offering a full line of high-quality, application-tailored lift trucks and solutions aimed at meeting the specific materials handling needs of its customers. The Company's solutions include attachments and hydrogen fuel cell power products, telematics, automation and fleet management services, as well as a variety of other power options for its lift trucks. The Company, 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 order rate for lift trucks fluctuates depending on the economic activity level 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, Brazil, the Philippines, Italy, Japan and Vietnam. As of March 31, 2024, the Company owned a 90% majority interest in Hyster-Yale Maximal Forklift (Zhejiang) Co., Ltd. ("Hyster-Yale Maximal"). The Company operates Bolzoni S.p.A. ("Bolzoni"). Bolzoni is a leading worldwide producer and distributor of attachments, forks and lift tables marketed under the Bolzoni ® , Auramo ® and Meyer ® brand names. Bolzoni also produces components for lift truck manufacturers. Bolzoni products are manufactured in the United States, Italy, China, Germany and Finland. Through the design, production and distribution of a wide range of attachments, Bolzoni has a strong presence in the market niche of lift truck attachments and industrial material handling. The Company operates Nuvera Fuel Cells, LLC ("Nuvera"). Nuvera is an alternative-power technology company focused on the design, manufacture and sale of hydrogen fuel cell stacks and engines. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Please refer to the discussion of Critical Accounting Policies and Estimates as disclosed on pages 16 through 17 in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. Critical Accounting Policies and Estimates have not materially changed since December 31, 2023. FINANCIAL REVIEW The results of operations for the Company were as follows: THREE MONTHS ENDED Favorable / (Unfavorable) MARCH 31 2024 2023 % Change Lift truck unit shipments (in thousands) Americas 15.6 16.1 (3.1) % EMEA 5.4 6.8 (20.6) % JAPIC 2.2 2.3 (4.3) % 23.2 25.2 (7.9) % Revenues Americas $ 769.7 $ 685.9 12.2 % EMEA 199.4 214.9 (7.2) % JAPIC 37.7 47.9 (21.3) % Lift truck business 1,006.8 948.7 6.1 % Bolzoni 96.2 98.6 (2.4) % Nuvera 0.5 1.6 (68.8) % Eliminations ( 47.0 ) ( 49.6 ) (5.2) % $ 1,056.5 $ 999.3 5.7 % 18 Table of Contents THREE MONTHS ENDED Favorable / (Unfavorable) MARCH 31 2024 2023 % Change Gross profit Americas $ 178.1 $ 121.2 46.9 % EMEA 33.9 26.9 26.0 % JAPIC 3.6 7.5 (52.0) % Lift truck business 215.6 155.6 38.6 % Bolzoni 21.8 20.7 5.3 % Nuvera (2.3) (2.1) (9.5) % Eliminations 0.6 0.2 n.m. $ 235.7 $ 174.4 35.1 % Selling, general and administrative expenses Americas $ 88.5 $ 73.7 (20.1) % EMEA 28.7 24.3 (18.1) % JAPIC 9.1 9.8 7.1 % Lift truck business 126.3 107.8 (17.2) % Bolzoni 18.5 16.3 (13.5) % Nuvera 7.1 7.7 7.8 % $ 151.9 $ 131.8 (15.3) % Operating profit (loss) Americas $ 89.6 $ 47.5 88.6 % EMEA 5.2 2.6 100.0 % JAPIC ( 5.5 ) ( 2.3 ) (139.1) % Lift truck business 89.3 47.8 86.8 % Bolzoni 3.3 4.4 (25.0) % Nuvera ( 9.4 ) ( 9.8 ) 4.1 % Eliminations 0.6 0.2 n.m. $ 83.8 $ 42.6 96.7 % Interest expense $ 8.9 $ 10.2 12.7 % Other (income) expense $ (2.0) $ (3.5) (42.9) % Net income attributable to stockholders $ 51.5 $ 26.6 93.6 % Diluted earnings per share $ 2.93 $ 1.55 89.0 % Reported income tax rate 32.6 % 24.2 % n.m. - not meaningful 19 Table of Contents 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, 2024, substantially all of the Company's backlog is expected to be sold within the next twelve months. THREE MONTHS ENDED MARCH 31 2024 2023 Unit backlog, beginning of period 78.4 102.1 Unit shipments (23.2) (25.2) Unit bookings 18.4 22.3 Unit backlog, end of period 73.6 99.2 The following is the detail of the approximate sales value of the Company's lift truck unit bookings and backlog. 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 2024 2023 Bookings, approximate sales value $ 520 $ 690 Backlog, approximate sales value $ 3,060 $ 3,690 First Quarter of 2024 Compared with First Quarter of 2023 The following table identifies the components of change in revenues for the first quarter of 2024 compared with the first quarter of 2023: Revenues Lift Truck HY Americas EMEA JAPIC 2023 $ 999.3 $ 685.9 $ 214.9 $ 47.9 Increase (decrease) in 2024 from: Price 58.2 47.5 10.7 — Foreign currency 6.0 0.8 5.8 (0.6) Unit volume and product mix (10.6) 26.9 (29.9) (7.6) Parts (10.2) (5.2) (2.8) (2.2) Bolzoni revenues (2.4) — — — Nuvera revenues (1.1) — — — Other 14.7 13.8 0.7 0.2 Eliminations 2.6 — — — 2024 $ 1,056.5 $ 769.7 $ 199.4 $ 37.7 Revenues increased 5.7% to $1,056.5 million in the first quarter of 2024 from $999.3 million in the first quarter of 2023. The increase in Lift Truck revenues was primarily due to improved pricing, partially offset by a decline in unit shipments, which more than offset a favorable shift in sales to higher-priced lift trucks, as well as lower parts volumes in the Americas and EMEA. The shift in sales to higher-priced lift trucks was mainly as a result of increased sales in the Americas of Class 4 and higher-priced/higher-capacity, 4- to 52-ton, Class 5 internal combustion engine lift trucks. Bolzoni's revenues decreased in the first quarter of 2024 compared with the first quarter of 2023 primarily due to the planned phase-out of low-margin legacy component sales. 20 Table of Contents The following table identifies the components of change in operating profit (loss) for the first quarter of 2024 compared with the first quarter of 2023: Operating Profit (Loss) Lift Truck HY Americas EMEA JAPIC 2023 $ 42.6 $ 47.5 $ 2.6 $ ( 2.3 ) Increase (decrease) in 2024 from: Lift truck gross profit 60.4 56.9 7.0 (3.9) Lift truck selling, general and administrative expenses (18.5) (14.8) (4.4) 0.7 Nuvera operations 0.4 — — — Bolzoni operations (1.1) — — — 2024 $ 83.8 $ 89.6 $ 5.2 $ (5.5) The Company recognized operating profit of $83.8 million in the first quarter of 2024 compared with $42.6 million in the first quarter of 2023. The increase in Lift Truck operating profit was primarily due to improved gross profit from higher pricing of $58.2 million, mainly in the Americas and EMEA, and favorable material costs in the Americas, partially offset by manufacturing inefficiencies tied to lower production volumes and lower parts volumes. The increase in gross profit was partially offset by higher selling, general and administrative expenses primarily due to increased employee-related costs, including incentive compensation, as well as higher product development and marketing costs. Operating profit in the Americas increased in the first quarter of 2024 compared with the first quarter of 2023, mainly as a result of improved gross profit from higher pricing of $47.5 million and favorable material costs. These increases were partially offset by manufacturing inefficiencies tied to lower production volumes and lower parts sales. In addition, operating profit was unfavorably impacted by higher selling, general and administrative expenses, primarily related to increased employee-related costs, including incentive compensation, and higher product development and marketing costs. EMEA's operating profit increased in the first quarter of 2024 compared with the first quarter of 2023, primarily from higher gross profit from improved pricing of $10.7 million and a shift in sales to higher-margin lift trucks. The increase was partially offset by lower unit and parts volume and higher selling, general and administrative expenses. The operating loss in JAPIC increased to $5.5 million in the first quarter of 2024 from $2.3 million in the first quarter of 2023, mainly due to higher warranty costs and lower production volumes. Bolzoni's operating profit decreased in the first quarter of 2024 compared with the first quarter of 2023, primarily due to higher selling, general and administrative expenses which more than offset an improvement in gross profit. The operating loss at Nuvera decreased in the first quarter of 2024 compared with the first quarter of 2023, mainly due to third-party funding to reimburse certain expenses. The Company recognized net income attributable to stockholders of $ 51.5 million in the first quarter of 2024 compared with $ 26.6 million in the first quarter of 2023. The improvement was primarily the result of higher operating profit, partially offset by increased income tax expense, mainly from a higher effective income tax rate in the first quarter of 2024 compared with the first quarter of 2023. This higher rate was due to the continued capitalization of research and development expenditures for U.S. tax purposes combined with the Company's inability to record deferred tax assets on its balance sheet given its U.S. valuation allowance position. See Note 5 of the Company's condensed consolidated financial statements for further discussion of the Company's income tax provision. 21 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Cash Flows The following tables detail the changes in cash flow for the three months ended March 31: 2024 2023 Change Operating activities: Net income $ 51.8 $ 27.2 $ 24.6 Depreciation and amortization 11.7 11.2 0.5 Stock-based compensation 9.2 4.9 4.3 Dividends from unconsolidated affiliates 4.4 5.7 (1.3) Other operating activities 4.0 2.8 1.2 Changes in assets and liabilities Accounts receivable (28.2) (12.7) (15.5) Inventories (37.6) (48.1) 10.5 Accounts payable and other liabilities 14.8 25.4 (10.6) Other current assets (7.7) (7.4) (0.3) Net cash provided by operating activities 22.4 9.0 13.4 Investing activities: Expenditures for property, plant and equipment (7.5) (3.3) (4.2) Proceeds from the sale of assets and business 0.5 1.5 (1.0) Purchase of noncontrolling interest — (3.2) 3.2 Net cash used for investing activities (7.0) (5.0) (2.0) Cash flow before financing activities $ 15.4 $ 4.0 $ 11.4 Net cash provided by operating activities increased $13.4 million in the first quarter of 2024 compared with the first quarter of 2023, primarily as a result of higher net income partially offset by changes in assets and liabilities. The changes were mainly due to a larger increase in accounts receivable during the first quarter of 2024 compared with the first quarter of 2023 mainly due to lower shipment levels in JAPIC which began in 2023 and a change in the timing of payments in EMEA. The change in net cash used for investing activities during the first quarter of 2024 compared with the first quarter of 2023 was mainly due to higher capital expenditures in 2024 partially offset by the absence of Bolzoni's purchase of a noncontrolling interest in 2023. 2024 2023 Change Financing activities: Net increase (decrease) of long-term debt and revolving credit agreements $ (15.7) $ 3.2 $ (18.9) Cash dividends paid (5.7) (5.6) (0.1) Purchase of treasury stock (9.1) (0.1) (9.0) Net cash used for financing activities $ (30.5) $ (2.5) $ (28.0) The change in net cash used for financing activities was primarily due to debt repayments during the first quarter of 2024 compared with additional borrowings in the first quarter of 2023. Additionally, the Company purchased treasury stock in the first quarter of 2024 related to employee-related incentive stock compensation plans. 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 included a $25.0 million tranche ("FILO Loans") which terminated on May 1, 2024. Commencing December 1, 2023, the $25.0 million tranche amortized on a monthly basis in the amount of $4.2 million per month. At March 31, 2024, $8.3 million was outstanding. 22 Table of Contents 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 $1.3 billion as of March 31, 2024. 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. The Facility limits the payment of dividends and other restricted payments the Company may make unless certain total excess availability and/or fixed charge coverage ratio thresholds, each as set forth in the Facility, are satisfied. 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, 2024, the Company was in compliance with the covenants in the Facility. Key terms of the Facility as of March 31, 2024 were as follows: LOANS OTHER THAN FILO LOANS FILO LOANS TOTAL FACILITY U.S. borrowing capacity $ 210.0 $ 8.3 $ 218.3 Non-U.S. borrowing capacity 90.0 — 90.0 Outstanding 57.5 8.3 65.8 Availability restrictions 5.1 — 5.1 Availability $ 237.4 $ — $ 237.4 LOANS OTHER THAN FILO LOANS FILO LOANS Applicable margins, as defined in agreement U.S. base rate loans 0.25% to 0.75% 2.25% SOFR, EURIBOR and non-U.S. base rate loans 1.25% to 1.75% 3.25% SOFR adjustment, as defined in agreement 0.10% 0.10% Applicable margins, for amounts outstanding U.S. base rate loans 0.50% — SOFR loans 1.50 % 3.25 % Non-U.S. base rate loans 1.50% — Applicable interest rate, for amounts outstanding U.S. base rate 9.00% SOFR 6.92% 8.68 % EURIBOR 5.35% — Facility fee, per annum on unused commitment 0.25% — The Term Loan requires quarterly principal payments on the last day of each March, June, September and December, which commenced September 30, 2021, in an amount equal to $562,500 and the final principal repayment is due in May 2028. The Company may also be required to make mandatory prepayments, in certain circumstances, as provided in the Term Loan. 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 U.S. 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 $900 million as of March 31, 2024. 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, 2024, the Company was in compliance with the covenants in the Term Loan. 23 Table of Contents Key terms of the Term Loan as of March 31, 2024 were as follows: TERM LOAN Outstanding $ 218.8 Discounts and unamortized deferred financing fees 3.1 Net amount outstanding $ 215.7 Applicable margins, as defined in agreement U.S. base rate loans 2.50% SOFR 3.50% SOFR adjustment, as defined in agreement 0.11% SOFR floor 0.50% Applicable interest rate, for amounts outstanding 8.94% The Company had other debt outstanding, excluding finance leases, of approximately $166.6 million at March 31, 2024. In addition to the excess availability under the Facility of $237.4 million, the Company had remaining availability of $31.8 million related to other non-U.S. revolving credit agreements at March 31, 2024. 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. Contractual Obligations, Contingent Liabilities and Commitments Since December 31, 2023, 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 page 24 in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. Capital Expenditures The following table summarizes actual and planned capital expenditures: Three Months Ended March 31, 2024 Planned for Remainder of 2024 Planned 2024 Total Actual 2023 Lift truck business $ 5.7 $ 66.2 $ 71.9 $ 26.8 Bolzoni 0.9 7.9 8.8 5.1 Nuvera 0.9 2.0 2.9 3.5 $ 7.5 $ 76.1 $ 83.6 $ 35.4 Planned expenditures for the remainder of 2024 are primarily for product development, improvements at manufacturing locations, manufacturing equipment improvements to information technology infrastructure. 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 2024 DECEMBER 31 2023 Change Cash and cash equivalents $ 62.2 $ 78.8 $ (16.6) Other net tangible assets 752.6 729.4 23.2 Intangible assets 37.3 39.3 (2.0) Goodwill 52.0 53.3 (1.3) Net assets 904.1 900.8 3.3 Total debt (474.8) (494.0) 19.2 Total temporary and permanent equity $ 429.3 $ 406.8 $ 22.5 Debt to total capitalization 53 % 55 % (2) % 24 Table of Contents OUTLOOK AND PERSPECTIVES Market Commentary In Q1 2024, the global economy remained strong overall. However, while recessionary concerns have declined, political unrest continues to create uncertainty for the global economic outlook. The latest publicly available lift truck market data indicates that Q4 2023 global lift truck market bookings increased by 14% year-over-year, with improvements in the EMEA and JAPIC markets offsetting a moderate decrease in the Americas. For full-year 2023, the global lift truck market new unit bookings decreased by 4% compared to an exceptionally strong 2022, with JAPIC market improvements more than offset by decreases in the Americas and EMEA markets. 2023 bookings exceeded pre-pandemic levels. The Company estimates that Q1 2024 global lift truck bookings moderated compared to relatively strong prior year levels. The decline was largely due to estimated decreases in the Americas market as well as in EMEA. Full-year 2024 global lift truck market unit volumes are projected to remain strong compared to pre-pandemic levels, but decrease moderately compared to 2023, with the second half in North America expected to be stronger than the first half. Consolidated Outlook At the consolidated level, the Company 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. The Company 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. Lift Truck Outlook Lift Truck's extended backlog levels and focus on booking orders with strong margins, combined with the market decline, led to an 18% bookings decrease compared to Q1 2023. • Sequentially, bookings increased 10% in Q1 2024 compared to Q4 2023, led by EMEA warehouse trucks, in part due to a large order for Class 2 and Class 3 units. • Q1 2024 average booking prices decreased moderately compared with fourth-quarter 2023 and prior year largely due to a shift toward lower-priced warehouse products. • In line with objectives, backlog levels decreased by 6% in the quarter compared to year-end 2023 levels. Looking ahead, the Lift Truck's objective as backlog levels and product lead times decrease is to be price competitive in the market but maintain targeted booking margins through new model introductions and cost decreases. Lift Truck expects an improving quarter-over-quarter bookings trend throughout 2024 due to anticipated market share gains in the Americas and EMEA, and improved North America market conditions in the second half of 2024. 25 Table of Contents Shipments are expected to increase in 2024 compared to 2023, due to three factors: 1. higher production rates, 2. supply chain and labor improvements in the Americas and EMEA, and 3. the dissipation of remaining product launch issues. As production and shipment rates increase, backlog levels and lead times on a large number of production lines are expected to decrease to targeted rates by year end. However, Class 5 lead times are expected to remain extended for a longer period. Lift Truck’s $3.1 billion backlog, equal to approximately 9 months of revenue at the current quarterly level, continues to support the business. The lift truck business generally expects this to continue as a result of a combination of new bookings and current backlog until market levels improve. Lift Truck 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 Lift Truck's previously communicated expectations and include the better-than-expected Q1 2024 results and anticipated improvements in subsequent quarters. Bolzoni Outlook Bolzoni anticipates 2024 revenues to be comparable to 2023 revenues. Product margins are expected to improve as Bolzoni increases production of higher-margin attachments and continues to phase out legacy component sales to the Lift Truck business. Operating profit is expected to increase modestly year-over-year, with increased gross profits anticipated to be partly offset by higher operating expenses. Nuvera Outlook Nuvera is focused on increasing customer product demonstrations and customer bookings in 2024 and expanding its presence in Europe and China. Booked orders from current customers are expected to result in higher 2024 sales compared with 2023. Nuvera expects the higher margins on these higher sales to be offset by increased development costs, leading to comparable year-over-year operating results. Further, funding granted by the U.S. Department of Energy in 2024, has the potential to offset costs in the future. Importantly, the increased engine demonstration activities in 2024 should significantly enhance the foundation for revenue from fuel cell engine technology adoption and improved financial returns in 2025 and future years. Consolidated Strategic Perspectives The Company's vision is to transform the way the world moves materials from Port to Home. The Company plans to do this through two customer promises: providing optimized product solutions and exceptional customer care. Ongoing execution of established strategic initiatives and key projects are expected to help the Company fulfill these promises and achieve long-term growth rates above the material handling market's expected growth rates. The Company believes these actions will contribute to an increased and sustainable lift truck and attachment competitive advantage over time. In addition, the Company believes that Nuvera's revenues will increase significantly over future years, bringing additional value to the Company's shareholders. In early April 2024, the Company announced it will change its name to Hyster-Yale, Inc. and change the name of Hyster-Yale Group, its Lift Truck business, to Hyster-Yale Materials Handling, Inc. These changes reinforce the Company's current structure of three distinct but interrelated businesses of Lift Trucks , Bolzoni attachments and Nuvera fuel cells, with lift trucks at its core. In this context, the Hyster-Yale Materials Handling name is better suited to the core business, aligning its name with its foundational materials handling activities. Both name changes are expected to be effective at the close of business on May 31, 2024. Lift Truck From a broad perspective, the Lift Truck business has three core strategies to transform it's competitiveness, market position and economic performance over time: 1. Provide products that increase customer productivity at the lowest cost of ownership. 2. Be the leader in the delivery of industry- and customer-focused solutions. 26 Table of Contents • Transform the Lift Truck's sales processes to meet a wide variety of customer needs across a broad set of end markets by using a more industry- and customer-focused approach. 3. Be the leader in independent distribution. • Focus on effectively coordinating dealer and major account coverage, enhancing dealer excellence and ensuring outstanding dealer ownership globally. The Lift Truck business expects to enhance its product capabilities by bringing a wide variety of high-priority vehicle innovations to market, including new modular and scalable product families, enhanced truck electrification and power options, and innovative technology advancements such as operator assist systems and vehicle automation. First, Lift Truck's heart-of-the-line award-winning modular, scalable 2- to 3.5-ton internal combustion engine lift trucks are now fully launched globally. The modular, scalable product platform is expected to enhance multiple areas of the business, including reducing supply chain costs, improving working capital levels, helping to optimize Lift Truck's manufacturing footprint, and providing customers with a more customizable product that better meets their needs: • In late March 2024, JAPIC launched the full 2-to 3-ton internal combustion modular, scalable product line, available in value, standard and premium truck configurations. • Bookings and shipments of these trucks are accelerating in the EMEA and Americas markets where they were initially launched in 2022 and 2023. • Lift Truck expects to offer similar modular and scalable enhancements on its 2- to 3.5-ton electric truck platforms in 2024 and 2025. Second, Lift Truck has key projects to capitalize on advancements in electric powertrains for applications now dominated by internal combustion engine trucks: • Lift Truck has an electrified fuel cell Container Handler operating at the Port of Los Angeles, USA, and an electrified fuel cell Reach Stacker operating at the Port of Valencia, Spain. • Lift Truck anticipates delivering a new electrified fuel cell Terminal Tractor and an electrified fuel cell Empty Container Handler to a customer in Hamburg, Germany in 2024. • In March 2024, Lift Truck announced the sale of 10 zero-emission battery-powered terminal tractors to APM Terminals at the Port of Mobile, USA, as part of an electrification pilot for port-equipment decarbonization. • Lift Truck is exploring options for additional electrification projects within the European Union and the United States. Third, Lift Truck also has key projects focused on applying its technology advancements to operator assist and automated product options. • Lift Truck began testing its internally developed automated truck at its first customer location in late March 2024. • Yale ReliantTM, a unique operator assist technology that helps forklift operators avoid potential hazards, earned an honorable mention in the Fast Company Innovation by Design Award. • At the 2024 MODEX material handling trade show, Lift Truck announced the standalone availability of its advanced dynamic stability technology, an underlying technology in the Yale Reliant solution. This system helps maintain overall vehicle stability and minimizes the potential for lift truck tip overs, which is a key source of risk for the industry. • Lift Truck is continuing to work with a technology-service provider to co-develop further robotics software for automated lift truck solutions. Finally, as part of its strategy to provide customer-focused solutions, Lift Truck plans to expand its global sourcing for container handlers and other Big Trucks such as 12- to 16-ton trucks. Lift Truck expects its Hyster ® RS45 and RS46 ReachStackers, Empty Container Handlers and 12- to 16-ton Big Trucks to be sourced from multiple global production locations in 2024 compared to its current single European source. This multiple-source supply chain will better meet global customer needs for faster delivery of economically viable trucks. Bolzoni Bolzoni's core strategy is to be the leader in the attachments business by: • concentrating on increasing its Americas business, and • strengthening its ability to provide innovative products to better serve key attachment industries and customers in global markets. To support this industry-specific strategy, Bolzoni is increasing its sales, marketing and product capabilities, especially in North 27 Table of Contents America. In keeping with its focus on innovative products, Bolzoni introduced a new attachment, the Home Appliance Telescopic Clamp for lift trucks, in March 2024. It is designed to easily handle home appliances and less than one pallet loads in confined spaces. In February 2024, Bolzoni introduced its Easy-Connect Product range, which features advanced technologies for smart logistics and Internet/Wi-Fi-enabled options. Nuvera Nuvera's core strategy is to be a leader in fuel cells and their applications. Its focus is on demonstrating 45kW and 60kW fuel cell production engines in a limited number of niche, heavy-duty vehicle applications. Fuel cell adoption has high potential to grow where batteries alone cannot meet the market’s need. As a result, these applications are expected to have nearer-term fuel cell adoption potential. Key projects include: • Collaborations with third parties to test Nuvera ® engines in targeted applications, including the Port of Los Angeles, USA, and the Port of Valencia, Spain, as well as a project with Helinor Energy for zero-emission energy solutions in maritime applications. • Additional product tests in bus applications in China and India and a port application in Germany are expected by mid-2024. • Development of a new, larger 125kW fuel cell engine for heavier-duty applications, projected to be available in 2025. • Development of modular fuel cells for stationary and mobile generator applications in collaboration with customers. In April 2024, Nuvera announced it was granted $30 million in matching federal funds from the U.S. Department of Energy as part of a $750 million investment in 52 hydrogen projects to reach National Clean Hydrogen Strategy goals. Using these funds, Nuvera plans to develop the high-volume production processes needed to scale-up its next-generation fuel cell stack technology. 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 (loss) 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 as a result of inflation or otherwise, including materials, critical components 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) reduction in demand for lift trucks, attachments and related aftermarket parts and service on a global basis, including any cyclical reduction in demand in the lift truck industry, (4) customer acceptance of pricing, (5) 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, (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, including the Uyghur Forced Labor Prevention Act (the “UFLPA”) which could impact the Company's imports from China, as well as armed conflicts, including the Russia/Ukraine conflict, the Israel and Gaza conflict and/or the conflict in the Red Sea, 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, 28 Table of Contents 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.