HYSTER-YALE, INC. 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in Millions, Except Per Share 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 310 independent dealers as of March 31, 2025. 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, Northern Ireland, China, the Netherlands, Mexico, the Philippines, Brazil, Japan, Italy and Vietnam. The Company owned a 90% majority interest in Hyster-Yale Maximal Forklift (Zhejiang) Co., Ltd. ("Hyster-Yale Maximal"), a manufacturer of low-intensity and standard lift trucks and specialized material handling equipment. Hyster-Yale Maximal also designs and produces specialized products in the port equipment and rough terrain forklift markets. 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. As of March 31, 2025, the Company operated 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. In April 2025, the Company announced a strategic business realignment of Nuvera's operations. See Note 15, Subsequent Events , of the Company's condensed consolidated financial statements for further discussion. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Please refer to the discussion of Critical Accounting Policies and Estimates as disclosed on pages 19 through 20 in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Critical Accounting Policies and Estimates have not materially changed since December 31, 2024. FINANCIAL REVIEW The results of operations for the Company were as follows: THREE MONTHS ENDED Favorable / (Unfavorable) MARCH 31, 2025 2024 % Change Revenues Americas $ 698.9 $ 769.7 (9.2) % EMEA 118.2 199.4 (40.7) % JAPIC 47.3 37.7 25.5 % Lift truck business 864.4 1,006.8 (14.1) % Bolzoni 80.3 96.2 (16.5) % Nuvera — 0.5 (100.0) % Eliminations ( 34.3 ) ( 47.0 ) (27.0) % $ 910.4 $ 1,056.5 (13.8) % 21 Table of Contents THREE MONTHS ENDED Favorable / (Unfavorable) MARCH 31, 2025 2024 % Change Gross profit (loss) Americas $ 144.5 $ 178.1 (18.9) % EMEA 12.9 33.9 (61.9) % JAPIC 3.4 3.6 (5.6) % Lift truck business 160.8 215.6 (25.4) % Bolzoni 18.5 21.8 (15.1) % Nuvera ( 2.0 ) ( 2.3 ) 13.0 % Eliminations 0.4 0.6 n.m. $ 177.7 $ 235.7 (24.6) % Selling, general and administrative expenses Americas $ 91.4 $ 88.5 (3.3) % EMEA 29.1 28.7 (1.4) % JAPIC 9.9 9.1 (8.8) % Lift truck business 130.4 126.3 (3.2) % Bolzoni 17.9 18.5 3.2 % Nuvera 7.9 7.1 (11.3) % $ 156.2 $ 151.9 (2.8) % Restructuring charges (reversal) Americas $ 0.7 $ — n.m. EMEA (1.3) — n.m. JAPIC 0.8 — n.m. Lift truck business 0.2 — n.m. Bolzoni — — n.m. Nuvera — — n.m. Eliminations — — n.m. $ 0.2 $ — n.m Operating profit (loss) Americas $ 52.4 $ 89.6 (41.5) % EMEA ( 14.9 ) 5.2 (386.5) % JAPIC ( 7.3 ) ( 5.5 ) (32.7) % Lift truck business 30.2 89.3 (66.2) % Bolzoni 0.6 3.3 (81.8) % Nuvera ( 9.9 ) ( 9.4 ) (5.3) % Eliminations 0.4 0.6 n.m. $ 21.3 $ 83.8 (74.6) % Interest expense $ 7.7 $ 8.9 13.5 % Other income $ (3.2) $ (3.1) 3.2 % Net income attributable to stockholders $ 8.6 $ 51.5 (83.3) % Diluted earnings per share $ 0.48 $ 2.93 (83.6) % Reported income tax rate 48.2 % 32.6 % n.m. - not meaningful 22 Table of Contents The following is the detail of the approximate sales 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 March 31, 2025, substantially all of the Company's backlog is expected to be sold within the next twelve months. THREE MONTHS ENDED MARCH 31 2025 2024 Bookings, approximate sales value $ 590 $ 520 Backlog, approximate sales value $ 1,910 $ 3,060 First Quarter of 2025 Compared with First Quarter of 2024 The following table identifies the components of change in revenues for the first quarter of 2025 compared with the first quarter of 2024: Revenues Lift Truck HY Americas EMEA JAPIC 2024 $ 1,056.5 $ 769.7 $ 199.4 $ 37.7 Increase (decrease) in 2025 from: Lift Truck Unit volume and product mix (162.7) (102.4) (70.0) 9.7 Foreign currency (11.3) (5.0) (5.3) (1.0) Other 22.7 26.3 (3.6) — Parts 5.3 3.9 0.5 0.9 Price 3.6 6.4 (2.8) — Bolzoni revenues (15.9) — — — Nuvera revenues (0.5) — — — Eliminations 12.7 — — — 2025 $ 910.4 $ 698.9 $ 118.2 $ 47.3 Revenues decreased 13.8% to $910.4 million in the first quarter of 2025 from $ 1,056.5 million in the first quarter of 2024. The decrease in Lift Truck revenues was primarily due to a decline in unit volume, mainly in the Americas and EMEA. The decrease was partially offset by higher other revenues, including improved fleet services revenue. Bolzoni's revenues decreased in the first quarter of 2025 compared with the first quarter of 2024, primarily due to lower unit volume. Nuvera's revenues decreased in the first quarter of 2025 compared with the first quarter of 2024, mainly as a result of lower intercompany sales to the lift truck business. The following table identifies the components of change in operating profit (loss) for the first quarter of 2025 compared with the first quarter of 2024: Operating Profit (Loss) Lift Truck HY Americas EMEA JAPIC 2024 $ 83.8 $ 89.6 $ 5.2 $ ( 5.5 ) Increase (decrease) in 2025 from: Lift truck gross profit (55.0) (33.6) (21.0) (0.2) Lift truck selling, general and administrative expenses (4.1) (2.9) (0.4) (0.8) Restructuring (0.2) (0.7) 1.3 (0.8) Bolzoni operations (2.7) — — — Nuvera operations (0.5) — — — 2025 $ 21.3 $ 52.4 $ (14.9) $ (7.3) 23 Table of Contents The Company recognized operating profit of $21.3 million in the first quarter of 2025 compared with $83.8 million in the first quarter of 2024. The decrease in Lift Truck operating profit was primarily due to lower gross profit, mainly from lower volume and higher material and freight costs, as well as lower overhead absorption rates. Additionally, selling, general and administrative expenses were higher, primarily related to increased marketing, product development and information technology costs. Operating profit in the Americas decreased to $52.4 million in the first quarter of 2025 compared with $ 89.6 million in the first quarter of 2024. The decrease was due to lower gross profit primarily from lower overhead absorption rates tied to lower production volume and higher warranty and freight costs. These decreases were partially offset by improved pricing. EMEA recognized an operating loss of $14.9 million in the first quarter of 2025 compared with operating profit of $ 5.2 million in the first quarter of 2024. The decrease was primarily due to lower gross profit from lower unit volume as well as lower overhead absorption rates tied to lower production volume. The operating loss in JAPIC was $7.3 million in the first quarter of 2025 compared with $ 5.5 million in the first quarter of 2024, mainly due to higher marketing costs and an $0.8 million restructuring charge. Bolzoni's operating profit decreased to $0.6 million in the first quarter of 2025 compared with $3.3 million in the first quarter of 2024, primarily due to lower unit volumes and unfavorable foreign currency movements. The operating loss at Nuvera increased in the first quarter of 2025 compared with the first quarter of 2024, mainly due to lower product development funding from third-parties. This was partially offset by savings realized through head count reduction initiatives implemented in 2024. The Company recognized net income attributable to stockholders of $ 8.6 million in the first quarter of 2025 compared with $ 51.5 million in the first quarter of 2024. The decline was primarily the result of lower operating profit in addition to a higher effective income tax rate in the first quarter of 2025 compared with the first quarter of 2024. See Note 5, Income Taxes , of the Company's condensed consolidated financial statements for further discussion of the Company's income tax provision. LIQUIDITY AND CAPITAL RESOURCES Cash Flows The following tables detail the changes in cash flow for the three months ended March 31, 2025 compared to the same period in the prior year: 2025 2024 Change Operating activities: Net Income $ 8.7 $ 51.8 $ (43.1) Depreciation and amortization 11.0 11.7 (0.7) Stock-based compensation 3.5 9.2 (5.7) Dividends from unconsolidated affiliates 8.0 4.4 3.6 Other operating activities 5.9 4.0 1.9 Changes in assets and liabilities Accounts receivable (8.0) (28.2) 20.2 Inventories (6.8) (37.6) 30.8 Other current assets (4.2) (7.7) 3.5 Accounts payable and other liabilities (54.5) 14.8 (69.3) Net cash provided by (used for) operating activities (36.4) 22.4 (58.8) Investing activities: Expenditures for property, plant and equipment (10.6) (7.5) (3.1) Proceeds from the sale of assets 0.3 0.5 (0.2) Net cash used for investing activities (10.3) (7.0) (3.3) Cash flow before financing activities $ (46.7) $ 15.4 $ (62.1) 24 Table of Contents Net cash provided by (used for) operating activities decreased $58.8 million in the first three months of 2025 compared with the first three months of 2024, primarily as a result of lower net income and a use of cash in other liabilities primarily due to employee-related payments, including incentive compensation, in the first quarter of 2025. This was offset by changes in accounts payable, accounts receivable and inventory mainly as a result of lower inventory purchases due to lower production and sales volumes during the first three months of 2025 compared with the first three months of 2024. The change in net cash used for investing activities during the first three months of 2025 compared with the first three months of 2024 was mainly due to higher capital expenditures in 2025. 2025 2024 Change Financing activities: Net increase (decrease) of long-term debt and revolving credit agreements $ 36.6 $ (15.7) $ 52.3 Cash dividends paid (6.2) (5.7) (0.5) Purchase of treasury stock (4.5) (9.1) 4.6 Net cash provided by (used for) financing activities $ 25.9 $ (30.5) $ 56.4 The change in net cash provided by (used for) financing activities was primarily due to net borrowings under the Company's revolving credit facilities during the first three months of 2025 compared to net payments in the first three months of 2024. Additionally, the Company purchased less treasury stock in the first three months of 2025 related to employee-related incentive stock compensation plans compared with the first three months of 2024. 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 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, 2025. 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, 2025, the Company was in compliance with the covenants in the Facility. Key terms of the Facility as of March 31, 2025 were as follows: FACILITY U.S. borrowing capacity $ 210.0 Non-U.S. borrowing capacity 90.0 Outstanding 96.9 Availability restrictions 6.0 Availability $ 197.1 25 Table of Contents FACILITY 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 8.00% SOFR 5.92% 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 approximately $0.6 million 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 $894.5 billion as of March 31, 2025. 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, 2025, the Company was in compliance with the covenants in the Term Loan. Key terms of the Term Loan as of March 31, 2025 were as follows: TERM LOAN Outstanding $ 216.6 Discounts and unamortized deferred financing fees 2.4 Net amount outstanding $ 214.2 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 7.94% The Company had other debt outstanding, excluding finance leases, of approximately $149.3 million at March 31, 2025. In addition to the excess availability under the Facility of $197.1 million, the Company had remaining availability of $54.4 million related to other non-U.S. revolving credit agreements at March 31, 2025. 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. 26 Table of Contents Contractual Obligations, Contingent Liabilities and Commitments Since December 31, 2024, 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 26 in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Capital Expenditures The following table summarizes actual and planned capital expenditures: Three Months Ended March 31, 2025 Planned for Remainder of 2025 Planned 2025 Total Actual 2024 Lift truck business $ 8.2 $ 27-47 $ 35-55 $ 37.5 Bolzoni 2.2 3-8 5-10 6.9 Nuvera 0.2 — 0.2 3.4 $ 10.6 $ 30-55 $ 40-65 $ 47.8 Planned expenditures for the remainder of 2025 are primarily for improvements at manufacturing locations and manufacturing equipment, product development and improvements to information technology infrastructure. The top end of the spending range reflects spending discipline and project prioritization as a result of increased global economic uncertainty. The Company will closely monitor market conditions and may adjust investments levels and timing as market visibility improves. The primary 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, 2025 DECEMBER 31, 2024 Change Cash and cash equivalents $ 77.2 $ 96.6 $ (19.4) Other net tangible assets 852.0 750.5 101.5 Intangible assets 33.0 33.1 (0.1) Goodwill 51.2 54.6 (3.4) Net assets 1,013.4 934.8 78.6 Total debt (484.0) (440.7) (43.3) Total temporary and permanent equity $ 529.4 $ 494.1 $ 35.3 Debt to total capitalization 48 % 47 % 1 % OUTLOOK Consolidated Strategic Perspective On April 30, 2025, the Company announced a strategic realignment of its Nuvera fuel cell business designed both to increase near term profits and to create an integrated energy solutions program at its Billerica, Massachusetts facility, which will be part of the Lift Truck business. The energy solutions program will include: • Development, manufacturing, and commercialization of its lithium-ion battery modules, battery chargers, battery management systems, and energy management services. These activities are critical to the Lift Truck's success as the business expects next generation batteries to be broadly used in electric forklift trucks. • Development, manufacturing and commercialization of a mobile, modular and scalable hybrid electric charging platform to provide off-grid power solutions. This platform will be configured to use the Lift Truck’s battery solutions as well as a variant called HydroCharge TM that incorporates Nuvera's patented fuel cell technology. • A significantly downsized and more limited fuel cell development program focused on the final development and testing of a higher powered 125KW fuel cell for use in the Lift Truck’s port equipment and larger HydroCharge TM applications. This more modest fuel cell program reflects the Company’s conclusion that its current fuel cell business 27 Table of Contents will not reach its profitability objectives in an acceptable period. The underlying analysis is based on recent fuel cells uptake rates as an energy solution, and on a significantly changed political environment in the U.S. and globally. This strategic realignment is expected to achieve direct annualized cost reductions of $15 to $20 million starting in the second half of 2025. The Company also expects an additional $10 to $15 million of Nuvera's costs to be absorbed by the Lift Truck business, largely to staff open positions, with the goal of accelerating development of batteries and related services and mobile charging products. As result of these actions, approximately $15 to $18 million of employee severance and impairment costs are expected in Q2 2025. Additional charges or expenditures are possible as the program progresses. This program takes advantage of Nuvera's technical skill base in each of the above initiatives. It lays the groundwork for: • more rapid maturity, growth and profitability of its battery and charger programs; • development, manufacturing and commercialization of its charging platforms for off grid power solutions; and • completion of its port equipment electric power solutions. The energy solutions program has significant technical and product synergies between fuel cells, lithium-ion batteries, chargers and mobile charge equipment in areas such as controls, packaging, cooling and manufacturing. Battery program sales in 2025 are expected to accelerate from 2024 levels and continue growing in the following years. Initial HydroCharge TM product sales are expected to begin in the second half of 2025, while battery and fuel cell electric port equipment trucks are currently testing in customer applications. These three product activities are expected to meet Lift Truck’s end user and dealer electric product distribution needs while providing additional service revenue opportunities over time. This strategic realignment is part of the Company’s broader change program aimed at transforming the way the world moves materials from Port to Home. It focuses on transforming the Company’s core lift truck business while building new growth opportunities in the warehouse forklift truck market, automation, energy solutions, and attachment activities through its Lift Truck and Bolzoni businesses. The Company's ongoing programs to develop modular, scalable products, optimize its manufacturing footprint, streamline its supplier structure, and expand its customer base with optimized customer solutions are key to the transformation of the core forklift truck business. With the new growth opportunities, these programs are expected to lead to significant revenue increases and enhanced operating profitability across the forklift truck market cycle while lowering capital intensity and improving historical returns on total capital employed. The Company’s full-year 2025 outlook includes anticipated negative tariff impacts along with the Company’s proactive initiatives—including pricing programs, global product resourcing, supply chain adjustments, and cost optimization programs. This forecast has several key assumptions, including: 1. U.S. tariffs in effect on April 9, 2025, as the baseline; 2. no reinstatement of April 9, 2025 tariffs that were paused for 90 days; 3. current Section 301 tariff exemption related to lift truck parts not extended beyond May 31, 2025; 4. no additional tariffs will be added globally; 5. company demand forecasts based on bookings trends, backlog levels and market data; 6. no significant demand decline stemming from a U.S. or global economic recession or tariffs; and 7. the successful implementation of the Company’s proactive initiatives outlined above. Despite the current challenging economic environment, the Company remains steadfast in its commitment to delivering optimal solutions and exceptional customer care and positioning the Company for substantial long-term profitable growth. Lift Truck Business The Company estimates that the global lift truck bookings market slightly improved in Q1 2025 compared to the prior year. The Lift Truck business experienced a substantial increase in Q1 2025 bookings, predominately in Americas and EMEA. Bookings of $590 million increased 48% sequentially and 13% year-over-year. This improvement was driven by heightened demand for higher-priced, Class 4 and 5 products including the Company's new modular, scalable lift trucks. These results highlight early signs of lift truck booking market recovery, especially in EMEA. The Lift Truck business remains well-positioned to capture additional market share across its product portfolio, reinforcing its long-term strategic goals. The market is expected to stabilize and improve across 2025, absent the potential effects from tariffs, which we believe caused order hesitation in April. 28 Table of Contents The Lift Truck business began 2025 with a backlog of $1.9 billion, which remained stable in the first quarter. Full-year production forecasts project an increasing rate compared to Q1 levels, with full-year revenues projected to slightly exceed annualized first quarter levels. While maintaining a consistent backlog, the Lift Truck business continues to balance production levels with demand for its products. Production rates are anticipated to increase in Q2 2025, followed by continued lift truck market booking growth in the second half of 2025. This is expected to position the Lift Truck business for accelerated growth in 2026. However, if the bookings market or Lift Truck's expected market share improvements fail to meet expectations, its global production levels will likely moderate in the latter half of 2025. The Lift Truck business continues to focus on maintaining bookings with product margins at or above targeted levels through a combination of new product introductions, including modular and scalable models, and ongoing cost and pricing discipline in existing products. Product margins are expected to decline in 2025 compared to the prior year due to increased competitive market dynamics but remain above target levels. Price increases were implemented during Q1 2025 to counter inflationary costs as well as initial tariffs implemented before March 31, 2025. Lift Truck’s prices are expected to be adjusted quickly to limit the tariff impact on its cost structure. Despite these challenging conditions, market share growth opportunities are expected to further strengthen Lift Truck’s competitive positioning across its product portfolio. Projects initiated in 2024 to streamline Lift Truck's manufacturing footprint and optimize its operations are progressing as planned. As part of the project implementation, Lift Truck anticipates incurring additional costs estimated between $8 million to $16 million in both 2025 and 2026. Initial benefits from these programs are expected in late 2025 but are expected to be offset by operational inefficiencies related to lower 2025 full-year production relative to 2024. In 2026, benefits are projected to remain modest as the programs are fully integrated. Starting in 2027, these fully developed programs should generate significant income and cash benefits ranging between $30 million to $40 million annually. These savings will significantly reduce the business’ negative impact from market cyclicality for the businesses. Savings estimates are based on current expected volume and cost assumptions. Operating expense is expected to increase year-over-year in 2025 to support strategic long-term profitable growth initiatives. The Lift Truck business plans to expand its sales capacity and capabilities while upgrading its core information technology systems. A portion of these increased expenses are likely to be offset by leveraging lower-cost shared service capabilities and implementing more efficient processes and tools. Operating profit is expected to moderately decline in the second quarter compared to the first quarter, despite anticipated production increases driven by strong bookings in Q1 2025. Second quarter profitability will be adversely affected by the impact of tariffs and a temporary lag in the implementation of price increases. As a result of the above factors and consistent with our prior view, 2025 operating profit is expected to be below 2024’s exceptionally strong results. Bolzoni Bolzoni's second-quarter revenues are projected to modestly improve compared to the first quarter. Improved attachment sales are expected to offset reduced legacy component sales to the Lift Truck business. Second quarter operating profit is anticipated to moderately increase due to a favorable product mix. Full year 2025 revenues are expected to decline year-over-year, reflecting weaker demand projections across its customer base. While improved product mix and ongoing cost discipline expected to provide some benefit, it is not expected to fully offset the revenue decline. As result, Bolzoni's full-year 2025 operating profit is anticipated to fall below 2024's adjusted operating profit. Consolidated Consistent with our prior outlook, the Company's full year 2025 revenues, production levels and profits are expected to be below robust 2024 results. Looking ahead, the Company anticipates modest sequential revenue growth in Q2 2025. However, consolidated operating profit for Q2 2025 is expected to decline moderately compared to Q1 2025, largely due to the timing of tariff-related cost increases and the actions taken to mitigate their impact. Current global trade policies and geopolitical uncertainty, among other factors, may cause the Company’s results to deviate from its current outlook. The financial discipline established over the past several years has been designed to deliver stronger and more consistent financial results. The Company targets a 7% operating profit margin across the business cycle. During periods of strong backlog-driven production, such as those experienced in early 2024, the Company should exceed this target. However, during cyclically lower lift truck market demand phases, the Company expects to remain profitable, likely generating operating profit margins below the 7% target. Profit stability across periods of revenue cyclicality improves the Company’s financial resiliency and marks a significant improvement from prior performance. 29 Table of Contents The Company continues to focus on generating strong operating cash flow and accretive capital deployment. To support these goals, the Company is actively implementing initiatives to drive working capital efficiency. With the expected 2025 lift truck production decrease, there is an intense focus on realigning production and working capital processes. Key actions, including targeted inventory reductions, are underway and are expected to yield significant progress in 2025. These efforts support strong full-year cash flow from operations projections, moderately below those achieved in 2024, despite the projected lower 2025 net income. The effective utilization of these strong cash flows is critical to the Company’s ongoing transformation. This involves substantial capital investments in advanced products, manufacturing efficiencies and information technology upgrades. For 2025, capital expenditures are now forecasted to range between $40 million and $65 million. The top end of the range is below initial expectations, reflecting spending discipline and project prioritization as a result of increased global economic uncertainty. Management will closely monitor market conditions and may adjust investments levels and timing as market visibility improves. As the Company continues to generate cash, it remains committed to its disciplined capital allocation framework. This includes reducing leverage, executing strategic investments to support profitable growth, and delivering sustainable value and strong returns to shareholders. 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 its two customer promises: first, to provide optimal solutions for our customers, and second, to provide exceptional customer care. The Company is focused on execution of established strategic initiatives and key projects to transform the Company’s core lift truck business while building new business opportunities in the warehouse lift truck, vehicle automation, energy management and attachment business activities. These complementary growth and profit improvement projects should help the Company fulfill these two promises as well as achieve long-term revenue and operating profit growth rates above the material handling market's expected growth rates. The Company believes key projects will contribute to an increased and sustainable lift truck and attachment competitive advantage over time. 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) impacts resulting from increased trade barriers and restrictions on international trade, including as a result of previously announced, and potentially new, changes to U.S. trade policy and tariffs as well as retaliatory tariffs imposed by other countries where the Company does business, (3) delays in manufacturing and delivery schedules, (4) 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, (5) customer acceptance of pricing, (6) customer acceptance of, changes in the costs of, or delays in the development of new products, (7) 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, (8) 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, (9) exchange rate fluctuations, interest rate volatility and monetary policies and other changes in the regulatory climate in the countries in which the Company operates 30 Table of Contents and/or sells products, (10) the effectiveness of the cost reduction programs implemented globally, including the successful implementation of procurement and sourcing initiatives and restructuring programs, (11) the successful commercialization of products and technology related to the energy solutions program, (12) political and economic uncertainties in the countries where the Company does business, as well as the effects of any withdrawals from such countries, (13) bankruptcy of or loss of major dealers, retail customers or suppliers, (14) introduction of new products by, more favorable product pricing offered by or shorter lead times available through competitors, (15) product liability or other litigation, warranty claims or returns of products, (16) changes mandated by federal, state and other regulation, including tax, health, safety or environmental legislation, (17) the ability to attract, retain, and replace workforce and administrative employees, (18) disruptions resulting from natural disasters, public health crises, political crises or other catastrophic events, and (19) the ability to protect the Company’s information technology infrastructure against service interruptions, data corruption, cyber-based attacks or network breaches.