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, Inc. ("Hyster-Yale" or the "Company") and its subsidiaries, including its operating company Hyster-Yale Materials Handling, Inc. ("HYMH"), 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 HYMH, 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 Company's distribution network consisted of approximately 350 independent dealers as of June 30, 2024. 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 June 30, 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. On May 31, 2024, the Company changed its corporate name to Hyster-Yale, Inc. and the Company’s wholly owned operating subsidiary, Hyster-Yale Group, Inc., changed its corporate name to Hyster-Yale Materials Handling, Inc. 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) SIX MONTHS ENDED Favorable / (Unfavorable) JUNE 30 JUNE 30 2024 2023 % Change 2024 2023 % Change Revenues Americas $ 881.5 $ 788.5 11.8 % $ 1,651.2 $ 1,474.4 12.0 % EMEA 187.8 200.6 (6.4) % 387.2 415.5 (6.8) % JAPIC 48.7 49.6 (1.8) % 86.4 97.5 (11.4) % Lift truck business 1,118.0 1,038.7 7.6 % 2,124.8 1,987.4 6.9 % Bolzoni 102.4 96.6 6.0 % 198.6 195.2 1.7 % Nuvera 0.2 1.0 (80.0) % 0.7 2.6 (73.1) % Eliminations ( 52.5 ) ( 45.7 ) 14.9 % ( 99.5 ) ( 95.3 ) 4.4 % $ 1,168.1 $ 1,090.6 7.1 % $ 2,224.6 $ 2,089.9 6.4 % 20 Table of Contents THREE MONTHS ENDED Favorable / (Unfavorable) SIX MONTHS ENDED Favorable / (Unfavorable) JUNE 30 JUNE 30 2024 2023 % Change 2024 2023 % Change Gross profit Americas $ 202.1 $ 143.4 40.9 % $ 380.2 $ 264.6 43.7 % EMEA 32.5 27.1 19.9 % 66.4 54.0 23.0 % JAPIC 4.8 6.5 (26.2) % 8.4 14.0 (40.0) % Lift truck business 239.4 177.0 35.3 % 455.0 332.6 36.8 % Bolzoni 22.4 22.6 (0.9) % 44.2 43.3 2.1 % Nuvera (2.5) (1.8) (38.9) % (4.8) (3.9) (23.1) % Eliminations — 0.1 (100.0) % 0.6 0.3 100.0 % $ 259.3 $ 197.9 31.0 % $ 495.0 $ 372.3 33.0 % Selling, general and administrative expenses Americas $ 98.1 $ 78.2 (25.4) % $ 186.6 $ 151.9 (22.8) % EMEA 27.7 26.0 (6.5) % 56.4 50.3 (12.1) % JAPIC 10.5 10.3 (1.9) % 19.6 20.1 2.5 % Lift truck business 136.3 114.5 (19.0) % 262.6 222.3 (18.1) % Bolzoni 18.4 17.2 (7.0) % 36.9 33.5 (10.1) % Nuvera 9.0 7.4 (21.6) % 16.1 15.1 (6.6) % $ 163.7 $ 139.1 (17.7) % $ 315.6 $ 270.9 (16.5) % Operating profit (loss) Americas $ 104.0 $ 65.2 59.5 % $ 193.6 $ 112.7 71.8 % EMEA 4.8 1.1 336.4 % 10.0 3.7 170.3 % JAPIC ( 5.7 ) ( 3.8 ) (50.0) % ( 11.2 ) ( 6.1 ) (83.6) % Lift truck business 103.1 62.5 65.0 % 192.4 110.3 74.4 % Bolzoni 4.0 5.4 (25.9) % 7.3 9.8 (25.5) % Nuvera ( 11.5 ) ( 9.2 ) (25.0) % ( 20.9 ) ( 19.0 ) (10.0) % Eliminations — 0.1 (100.0) % 0.6 0.3 100.0 % $ 95.6 $ 58.8 62.6 % $ 179.4 $ 101.4 76.9 % Interest expense $ 8.8 $ 8.4 (4.8) % $ 17.7 $ 18.6 4.8 % Other (income) expense $ (3.2) $ (0.4) 700.0 % $ (5.2) $ (3.9) 33.3 % Net income attributable to stockholders $ 63.3 $ 38.3 65.3 % $ 114.8 $ 64.9 76.9 % Diluted earnings per share $ 3.58 $ 2.21 62.0 % $ 6.51 $ 3.76 73.1 % Reported income tax rate 29.0 % 23.6 % 30.7 % 23.9 % The following is the detail of the approximate value of the Company's lift truck unit bookings dollar value and lift truck backlog dollar value. The dollar value of bookings and backlog is calculated using the current unit bookings and backlog and the forecasted average sales price per unit. As of June 30, 2024, 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 2024 2023 2024 2023 Bookings, approximate sales value $ 380 $ 680 $ 900 $ 1,370 Backlog, approximate sales value $ 2,560 $ 3,610 $ 2,560 $ 3,610 21 Table of Contents Second Quarter of 2024 Compared with Second Quarter of 2023 The following table identifies the components of change in revenues for the second quarter of 2024 compared with the second quarter of 2023: Revenues Lift Truck HY Americas EMEA JAPIC 2023 $ 1,090.6 $ 788.5 $ 200.6 $ 49.6 Increase (decrease) in 2024 from: Lift Truck Price 49.1 47.0 2.1 — Other 27.5 27.5 0.1 (0.1) Unit volume and product mix 9.6 23.0 (14.1) 0.7 Foreign currency 0.6 (0.2) 1.2 (0.4) Parts (7.5) (4.3) (2.1) (1.1) Bolzoni revenues 5.8 — — — Nuvera revenues (0.8) — — — Eliminations (6.8) — — — 2024 $ 1,168.1 $ 881.5 $ 187.8 $ 48.7 Revenues increased 7.1% to $1,168.1 million in the second quarter of 2024 from $1,090.6 million in the second quarter of 2023. The increase in Lift Truck revenues was primarily due to improved pricing, as well as favorable "Other" revenue as a result of lower customer and dealer incentive programs in 2024 compared to 2023. These increases were partially offset by a decline in unit volume in EMEA and lower parts sales, which were more than offset by a favorable shift in sales to higher-priced lift trucks, primarily in the Americas. The shift in sales to higher-priced lift trucks was mainly as a result of increased sales of higher capacity models within Class IV and V internal combustion trucks, including higher sales of Big Trucks. Bolzoni's revenues increased in the second quarter of 2024 compared with the second quarter of 2023, primarily due to higher sales volumes. The following table identifies the components of change in operating profit (loss) for the second quarter of 2024 compared with the second quarter of 2023: Operating Profit (Loss) Lift Truck HY Americas EMEA JAPIC 2023 $ 58.8 $ 65.2 $ 1.1 $ ( 3.8 ) Increase (decrease) in 2024 from: Lift truck gross profit 62.3 58.7 5.4 (1.7) Lift truck selling, general and administrative expenses (21.8) (19.9) (1.7) (0.2) Nuvera operations (2.3) — — — Bolzoni operations (1.4) — — — 2024 $ 95.6 $ 104.0 $ 4.8 $ (5.7) The Company recognized operating profit of $95.6 million in the second quarter of 2024 compared with $58.8 million in the second quarter of 2023. The increase in Lift Truck operating profit was primarily due to improved gross profit from higher pricing of $49.1 million, mainly in the Americas, improved margin from lower dealer and customer incentives and favorable material costs in the Americas. These increases were 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 related to higher marketing, product development and product liability costs, as well as increased employee-related costs, including incentive compensation. Operating profit in the Americas increased in the second quarter of 2024 compared with the second quarter of 2023, mainly as a result of improved gross profit from higher pricing of $47.0 million, improved margin from lower dealer and customer incentives and favorable material costs. Operating profit was unfavorably impacted by higher selling, general and administrative expenses. 22 Table of Contents EMEA's operating profit increased in the second quarter of 2024 compared with the second quarter of 2023, primarily from higher gross profit from a shift in sales to higher-margin lift trucks and improved pricing of $2.1 million. 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 $5.7 million in the second quarter of 2024 from $3.8 million in the second quarter of 2023, mainly due to higher freight costs. Bolzoni's operating profit decreased in the second quarter of 2024 compared with the second 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 increased in the second quarter of 2024 compared with the second quarter of 2023, mainly due to higher selling, general and administrative expenses, primarily related to higher product development and lease expenses. The Company recognized net income attributable to stockholders of $ 63.3 million in the second quarter of 2024 compared with $ 38.3 million in the second 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 second quarter of 2024 compared with the second 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. First Six Months of 2024 Compared with First Six Months of 2023 The following table identifies the components of change in revenues for the first six months of 2024 compared with the first six months of 2023: Revenues Lift truck HY Americas EMEA JAPIC 2023 $ 2,089.9 $ 1,474.4 $ 415.5 $ 97.5 Increase (decrease) in 2024 from: Lift Truck Price 107.3 94.5 12.8 — Other 42.2 41.3 0.8 0.1 Foreign currency 6.6 0.6 7.0 (1.0) Parts (17.7) (9.5) (4.9) (3.3) Unit volume and product mix (1.0) 49.9 (44.0) (6.9) Bolzoni revenues 3.4 — — — Nuvera revenues (1.9) — — — Eliminations (4.2) — — — 2024 $ 2,224.6 $ 1,651.2 $ 387.2 $ 86.4 Revenues increased 6.4% to $2,224.6 million in the first six months of 2024 from $2,089.9 million in the first six months of 2023. The increase was primarily due to improved pricing, as well as favorable "Other" revenue as a result of lower customer and dealer incentive programs in 2024 compared to 2023. These increases were partially offset by a decline in unit volume in EMEA, which was more than offset by a favorable shift in sales to higher-priced lift trucks mainly in the Americas, as well as lower part sales. The shift in sales to higher-priced lift trucks was mainly as a result of increased sales of higher capacity models within Class IV and V internal combustion trucks, including higher sales of Big Trucks. Bolzoni revenues increased in the first six months of 2024 compared with the first six months of 2023, mainly from improved pricing. 23 Table of Contents The following table identifies the components of change in operating profit for the first six months of 2024 compared with the first six months of 2023: Operating Profit (Loss) Lift truck HY Americas EMEA JAPIC 2023 $ 101.4 $ 112.7 $ 3.7 $ ( 6.1 ) Increase (decrease) in 2024 from: Lift truck gross profit 122.7 115.6 12.4 (5.6) Lift truck selling, general and administrative expenses (40.3) (34.7) (6.1) 0.5 Bolzoni operations (2.5) — — — Nuvera operations (1.9) — — — 2024 $ 179.4 $ 193.6 $ 10.0 $ (11.2) The Company recognized an operating profit of $179.4 million in the first six months of 2024 compared with $101.4 million in the first six months of 2023. The increase in Lift Truck operating profit was primarily due to improved gross profit from higher pricing of $107.3 million in the Americas and EMEA, favorable material costs and improved margin from lower dealer and customer incentives in the Americas compared with the first six months of 2023. These items were 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 six months of 2024 compared with the first six months of 2023, primarily due to improved gross profit from higher pricing of $94.5 million, favorable material costs and improved margin from lower dealer and customer incentives in the Americas compared with the first six months of 2023. These improvements 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. EMEA's operating profit increased in the first six months of 2024 compared with the first six months of 2023, mainly due to improved gross profit from improved pricing of $12.8 million and a shift in sales mix to higher-margin lift trucks, partially offset by lower unit and part volumes. JAPIC's operating loss increased to $11.2 million in the first six months of 2024 from $6.1 million in the first six months of 2023, primarily due to lower gross profit from unfavorable freight costs, lower unit and part volume and a shift in mix to lower-margin products, partially offset by favorable foreign currency movements and lower selling, general and administrative expenses. Bolzoni's operating profit decreased to $7.3 million in the first six months of 2024 compared with $9.8 million in the first six months of 2023, mainly due to higher selling, general and administrative costs, primarily related to higher employee and warranty costs. Nuvera's operating loss increased to $20.9 million in the first six months of 2024 compared with $19.0 million in the first six months of 2023, primarily from higher selling, general and administrative expenses, primarily related to higher lease expenses. The Company recognized net income attributable to stockholders of $ 114.8 million in the first six months of 2024 compared with $ 64.9 million in the first six months of 2023. The improvement was primarily the result of the factors affecting operating profit, partially offset by higher income taxes. See Note 5 of the Company's condensed consolidated financial statements for further discussion of the Company's income tax provision. 24 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Cash Flows The following tables detail the changes in cash flow for the six months ended June 30: 2024 2023 Change Operating activities: Net income $ 115.7 $ 66.0 $ 49.7 Depreciation and amortization 24.1 22.5 1.6 Stock-based compensation 17.4 10.8 6.6 Dividends from unconsolidated affiliates 4.4 10.5 (6.1) Other operating activities 8.8 6.9 1.9 Changes in assets and liabilities Accounts receivable (83.9) (55.4) (28.5) Inventories 9.0 (19.8) 28.8 Accounts payable and other liabilities (74.2) 10.6 (84.8) Other current assets (1.4) (7.3) 5.9 Net cash provided by operating activities 19.9 44.8 (24.9) Investing activities: Expenditures for property, plant and equipment (19.7) (10.6) (9.1) Proceeds from the sale of assets and business 1.0 1.9 (0.9) Purchase of noncontrolling interest — (3.2) 3.2 Net cash used for investing activities (18.7) (11.9) (6.8) Cash flow before financing activities $ 1.2 $ 32.9 $ (31.7) Net cash provided by operating activities decreased $24.9 million in the first six months of 2024 compared with the first six months of 2023, primarily as a result of changes in assets and liabilities partially offset by higher net income. The changes in assets and liabilities were mainly due to a large decrease in accounts payable and other liabilities during the first six months of 2024 compared with the first six months of 2023. The decrease in accounts payable and other liabilities is mainly due to a decrease in customer deposits, payment of employee incentives and higher settlements of product liability claims in the first six months of 2024 compared with the first six months of 2023. In addition, accounts receivable increased mainly due to increased revenues in the first six months of 2024 compared to the first six months of 2023. The change in net cash used for investing activities during the first six months of 2024 compared with the first six months 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 $ 10.8 $ (15.8) $ 26.6 Cash dividends paid (13.1) (12.4) (0.7) Purchase of treasury stock (9.1) (0.1) (9.0) Other — (0.6) 0.6 Net cash used for financing activities $ (11.4) $ (28.9) $ 17.5 The change in net cash used for financing activities was primarily due to additional borrowings during the first six months of 2024 compared with debt repayments in the first six months of 2023. Additionally, the Company purchased treasury stock in the first six months of 2024 related to employee-related incentive stock compensation plans. 25 Table of Contents Financing Activities The Company has a $300.0 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 previously included a $25.0 million tranche which terminated on May 1, 2024. 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 June 30, 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 June 30, 2024, the Company was in compliance with the covenants in the Facility. Key terms of the Facility as of June 30, 2024 were as follows: FACILITY U.S. borrowing capacity $ 210.0 Non-U.S. borrowing capacity 90.0 Outstanding 106.7 Availability restrictions 4.8 Availability $ 188.5 Applicable margins, as defined in agreement U.S. base rate loans 0.25% to 0.75% SOFR, EURIBOR and non-U.S. base rate loans 1.25% to 1.75% SOFR adjustment, as defined in agreement 0.10% Applicable margins, for amounts outstanding U.S. base rate loans 0.50% SOFR loans 1.50 % Non-U.S. base rate loans 1.50% Applicable interest rate, for amounts outstanding U.S. base rate 9.00% SOFR 6.94% EURIBOR 5.27% 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 June 30, 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 26 Table of Contents 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 June 30, 2024, the Company was in compliance with the covenants in the Term Loan. Key terms of the Term Loan as of June 30, 2024 were as follows: TERM LOAN Outstanding $ 218.2 Discounts and unamortized deferred financing fees 2.9 Net amount outstanding $ 215.3 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 $153.8 million at June 30, 2024. In addition to the excess availability under the Facility of $188.5 million, the Company had remaining availability of $28.5 million related to other non-U.S. revolving credit agreements at June 30, 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: Six Months Ended June 30, 2024 Planned for Remainder of 2024 Planned 2024 Total Actual 2023 Lift truck business $ 16.0 $ 32.4 $ 48.4 $ 26.8 Bolzoni 2.0 6.8 8.8 5.1 Nuvera 1.7 1.1 2.8 3.5 $ 19.7 $ 40.3 $ 60.0 $ 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. 27 Table of Contents Capital Structure The Company's capital structure is presented below: JUNE 30 2024 DECEMBER 31 2023 Change Cash and cash equivalents $ 66.5 $ 78.8 $ (12.3) Other net tangible assets 830.0 729.4 100.6 Intangible assets 35.9 39.3 (3.4) Goodwill 51.6 53.3 (1.7) Net assets 984.0 900.8 83.2 Total debt (501.9) (494.0) (7.9) Total temporary and permanent equity $ 482.1 $ 406.8 $ 75.3 Debt to total capitalization 51 % 55 % (4) % OUTLOOK AND LONG-TERM OBJECTIVES Lift Truck Business The Lift Truck business is focused on delivering optimal solutions to its broad customer base, including lift trucks and advanced on-truck technologies, such as its innovative Operator Assist Systems (OAS). Together, these solutions provide customers with the right capabilities and functionality for their specific applications, while also increasing the unit sales value substantially. As a result of both Lift Truck's product line breadth and increasingly value-add technology solutions, per unit truck sales values can differ materially. Thus, aggregate unit data has become less meaningful. In this context, the Company will focus on total dollar values as its measure for bookings and backlog. Lift Truck estimates that the Q2 2024 global lift truck market was lower than prior year levels, with a significant decrease in the Americas market and a more moderate reduction in the EMEA market. The Industrial Truck Association (ITA) provides current North America market data for factory bookings, generally defined as orders placed directly with the manufacturer, which showed a 56% year-over-year decrease in Q2 2024. The reduced North America factory booking rates were expected after the highly elevated levels experienced during the pandemic and subsequent period of supply chain shortages. However, the decrease was steeper and earlier than anticipated. In effect, these recent, low factory bookings are quickly moving total average factory bookings back toward a normalized growth trend line. The Lift Truck business currently expects below-trend North America factory bookings to continue into early 2025. During this period, it is expected that the below-trend booking levels will balance out the prior above-trend rates, returning the market to a normalized level. Consistent with these market factors, Lift Truck's dollar-value factory bookings continued to decline quarter-over-quarter to $380 million in Q2 2024 from $680 million in Q2 2023 and $520 million in Q1 2024. The Americas segment decline was most significant with Q2 2024 factory bookings of $230 million down 56% from prior year and 36% sequentially. While Lift Truck increased its Americas market share in the first six months of 2024, this did not offset the steep market decline. To put 2024's North America factory bookings in context, Lift Truck believes that recent factory booking declines are due to: • Order cancellations by customers who no longer need previously placed orders due to lower than expected activity, • Reduced lead times, • Customer and dealer requests to delay shipments of current backlog orders to a time that better suits their needs, or • Current retail bookings, orders placed through dealers with specific end-customer purchase orders, being fulfilled from existing, unshipped factory bookings or from current dealer stock levels. Considering Lift Truck's strong global backlog, including in the Americas, shipments are expected to continue at sound levels for the remainder of 2024. The Americas' few remaining open 2024 production slots are expected to be filled between August and December. This segment is working to extend its backlog by filling open 2025 production slots, largely in the second half of the year. Lift Truck expects to continue increasing Americas' market share over the remainder of 2024 and into 2025. These expected gains are the result of the recently introduced 1 to 3.5-ton modular, scalable products reaching their full market potential, as well as additional modular, scalable products expected to be launched in the second half of 2024 and first half of 2025. 28 Table of Contents The market situation in the EMEA and JAPIC segments is similar to the Americas but much less pronounced. During the pandemic and supply chain disruption periods, factory orders in these regions increased more slowly than in the Americas. EMEA and JAPIC factory orders were $150 million in Q2 2024 compared to $160 million in both Q2 2023 and Q1 2024. EMEA and JAPIC market shares are expected to strengthen as production rates for the new 1 to 3.5-ton modular, scalable products ramps up. Share is expected to improve further as the new products begin to achieve their full potential, along with the launch of additional products later in 2024 and in 2025. Production slots in these regions are also largely filled for the balance of 2024, with some lines already in a strong backlog position for 2025. Lift Truck's current backlog should keep its global shipments generally in line with 2024 production expectations. However, certain lines, particularly in the JAPIC and EMEA lower value warehouse products, are expected to have lower shipments in the second half of 2024 compared to the first half. Global production levels may moderate in 2025 without market or share improvements above current expectations. Over the past 18 months, Lift Truck has benefited from strong pricing tailwinds and a significant order backlog, which led to product margins above the targeted levels. Looking ahead, Lift Truck is focused on maintaining competitively priced products at or above targeted margin levels. Lift Truck expects to achieve its targeted booking margins through a combination of new model introductions, cost decreases and ongoing pricing discipline. The combination of rising market share and new bookings, along with the seasonally lower Q3 production levels and Lift Truck’s $2.6 billion backlog, which is equal to 6 to 7 months of revenue at the current quarterly run rate, should help to support the business until market levels improve. In this context, Lift Truck expects continued year-over-year revenue growth and strong product margins in the second half of 2024 as higher-priced, higher-margin backlog units are shipped. Material and freight cost inflation is expected to somewhat temper the favorable second-half price-to-cost ratio. The combination of these factors and higher operating expenses are expected to reduce second-half operating profit modestly compared with the prior year. Lift Truck is closely monitoring the effects of freight and material cost inflation and a weaker U.S. market and will quickly take any additional cost containment actions needed to help offset the negative impacts. Specifically, in Q3 2024, revenues are expected to increase compared to the prior year, while operating profit is expected to be comparable. Sequentially, third-quarter revenues and operating profit are expected to decrease from the strong second-quarter results due to normal business seasonality and modest impacts from freight cost inflation. Bolzoni Bolzoni expects second-half 2024 gross profit to increase compared to second-half 2023. Product margins are expected to improve, despite an expected revenue decline, as Bolzoni increases production of higher-margin attachments and phases out lower-margin legacy component sales to the Lift Truck business. Second-half 2024 operating profit is expected to increase year-over-year, with increased gross profits partly offset by higher operating expenses. Nuvera Nuvera remains focused on increasing customer product demonstrations and customer orders in second-half 2024. Shipments are expected to increase in the second half of the year, specifically Q4 2024, compared to second-half 2023, due to current customer orders and anticipated orders for Nuvera's new portable generator, which was introduced in May 2024. The combination of the higher sales and anticipated lower operating expenses is expected to lead to a lower second-half operating loss year-over-year. Consolidated Full-year 2024 results are expected to improve compared to the Company's prior outlook due to better-than-expected second quarter results and anticipated further financial improvements in the second half of the year. Second-half revenues should increase while operating profit is likely to moderate slightly compared to the same 2023 period. The Company expects lower interest and tax expense in the second half, year-over-year. As a result, second-half 2024 net income is anticipated to be generally comparable to strong prior year levels, with a modest third-quarter decline expected to be offset by a fourth-quarter improvement. The Company's effective tax rate is anticipated to be modestly higher than 2023, largely due to the capitalization of research and development expenses, but lower than previously anticipated due to a higher U.S. earnings base. For the twelve-month period ended June 30, 2024, the Company achieved its 7% operating profit margin goal for the combined Lift Truck and Bolzoni businesses, and it achieved its consolidated goal for a greater than 20% return on total capital employed. 29 Table of Contents These favorable results were due to the substantial post-pandemic backlog in the Lift Truck business and lower-than-anticipated cost inflation. The latter followed a sustained period of high inflation that resulted in multiple lift truck price increases. With markets returning to more normalized levels over time, results are likely to moderate in the 2024 second half from the robust first-half levels. As a result, the Company expects its return measures to moderate, but remain above pre-pandemic levels. However, over time, the Company expects its return measures to return to target levels and be sustainable as a result of its maturing strategic initiatives. The Company continues to focus on reducing its financial leverage and improving its cash flows and expects further inventory reductions to decrease working capital. Capital expenditures are expected to be $60 million in 2024, down from a Q1 2024 projection of $84 million. While substantial investments are anticipated, maintaining liquidity remains a priority. Overall, the Company expects 2024 cash flow from operations to increase significantly compared with 2023. Long-Term Objectives The Company's vision is to transform the way the world moves materials from Port to Home. It strives 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 revenue and operating profit 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 Hyster-Yale's shareholders. Further information regarding the Company's strategic initiatives can be found in the Company's Q2 2024 Investor Deck. This presentation, available on the Hyster-Yale website, elaborates on the strategies that are critical for Hyster-Yale's long-term prospects. The Company encourages investors to review this material to ensure a clear understanding of Hyster-Yale's future direction. 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 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, 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) 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 30 Table of Contents 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.