Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2023 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-54799 HYSTER-YALE MATERIALS HANDLING, INC. (Exact name of registrant as specified in its charter) Delaware 31-163 ...

Financial Performance & Outlook - Hyster-Yale achieved record quarterly revenues of $985.2 million in Q4 2022[11] - Hyster-Yale's Q4 2022 net income was $7.6 million, showing better-than-expected profitability[16] - The average sales price per unit in backlog increased by approximately 34% from Q4 2021[16] - Hyster-Yale anticipates a significant increase in revenues and substantial operating profit in 2023[93] - Hyster-Yale expects increased margins and higher operating profit in 2023 compared to 2022[93] Segment Performance (Q4 2022) - Lift Truck segment revenue reached $938.0 million with an operating profit of $27.2 million and adjusted EBITDA of $36.8 million[19] - Bolzoni's revenue was $92.0 million, with an operating profit of $2.0 million and adjusted EBITDA of $5.1 million[19] - Nuvera's revenue was $1.3 million, with an operating loss of $9.3 million and adjusted EBITDA of -$9.1 million[19] Market Dynamics & Strategy - Hyster-Yale's backlog decreased by approximately 10% from its peak in Q1 2022[11] - Hyster-Yale's sales in the Americas accounted for approximately 67.8% of total sales in 2022[18] - Hyster-Yale is focused on core strategies to transform its competitiveness, market position, and economic performance[16]

Financial Data and Key Metrics Changes - The company reported consolidated revenues of $985 million for the fourth quarter, a record high, representing a nearly 19% increase year-over-year [94] - The consolidated operating profit for the fourth quarter was approximately $20 million, a significant improvement from an operating loss of $107 million in the same quarter of the previous year [96] - Net income for the fourth quarter was $7.6 million compared to a net loss of $103 million in the prior year [97] Business Line Data and Key Metrics Changes - The lift truck business generated an operating profit of $27 million in the fourth quarter, compared to an operating loss of $93 million in the prior year [98] - Bolzoni reported an operating profit of $2 million in the fourth quarter, recovering from a loss of approximately $2 million in the previous year [101] - Nuvera's operating loss decreased to about $9 million in the fourth quarter, an improvement from a loss of $11 million in the prior year [102] Market Data and Key Metrics Changes - The global lift truck market is expected to decrease in each quarter of 2023 compared to 2022, although it should remain above pre-pandemic levels [82] - Lift truck bookings decreased in the fourth quarter compared to the previous year, attributed to a focus on solid margin orders and extended lead times [83] - The average sales price of a backlog unit increased by nearly 35% year-over-year and almost 7% sequentially [86] Company Strategy and Development Direction - The company aims to improve profitability by focusing on higher margin backlog units and increasing production rates throughout 2023 [108] - Strategic initiatives include the introduction of modular and scalable products and advancements in truck electrification and technology [120] - The company is working closely with suppliers to ensure a consistent flow of materials and minimize disruptions [111] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, expecting continued gains from higher margin backlog units and substantial operating profit in 2023 [108] - The company anticipates a significant increase in cash flow before financing activities in 2023 compared to 2022 [113] - Management noted that the current order cancellation rate is low, reflecting ongoing demand for new replacement lift trucks [89] Other Important Information - The company generated positive cash flow before financing activities of $5 million in 2022, a significant improvement from a nearly $280 million use of cash in the previous year [105] - The company ended 2022 with cash on hand of $59 million and total debt of $553 million, showing a modest increase in net debt sequentially [106] - The company is focused on reducing inventory levels as production ramps up, which is expected to lead to a significant reduction in inventory days on hand by year-end [107] Q&A Session Summary Question: Can you speak to the cadence of operating profit improvement as you work through the lower margin backlog? - Management indicated that improvements are expected to build on the fourth quarter of 2022, with the majority of lower margin units produced in the first half of 2023 [119] Question: How is the company addressing the challenges in Europe? - Management acknowledged ongoing supply chain issues in Europe but expressed confidence in gradually increasing production volumes as these challenges are addressed [2][4] Question: What are the expectations for Bolzoni in relation to lift truck sales? - Management stated that Bolzoni's performance is closely tied to lift truck sales, and as shipments rise, Bolzoni is expected to benefit from increased demand [40]

Part I [Item 1. Business](index=4&type=section&id=Item%201.%20BUSINESS) The company is a globally integrated manufacturer of lift trucks, attachments, and parts, segmented into Americas, EMEA, and JAPIC, also operating Bolzoni and Nuvera - The company is a globally integrated, full-line lift truck manufacturer with operations segmented into Americas, EMEA, and JAPIC, also operating Bolzoni (attachments) and Nuvera (hydrogen fuel cells)[11](index=11&type=chunk)[12](index=12&type=chunk) Revenue Components by Year | Component | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Lift trucks | 73 % | 73 % | 76 % | | Parts | 15 % | 15 % | 14 % | | Service, rental and other | 7 % | 6 % | 5 % | | Bolzoni | 5 % | 6 % | 5 % | | Nuvera | less than 1% | less than 1% | less than 1% | - Sales of internal combustion engine lift trucks and electric lift trucks accounted for approximately **43%** and **30%** of annual revenues in 2022, respectively[13](index=13&type=chunk) Backlog of Unfilled Lift Truck Orders | Date | Units (in thousands) | Approx. Sales Value (in millions) | | :--- | :--- | :--- | | December 31, 2022 | 102.1 | $3,730 | | September 30, 2022 | 108.2 | $3,700 | | December 31, 2021 | 105.3 | $2,880 | - The company faces intense competition based on distribution strength, brand loyalty, customer service, price, and product performance, competing with global manufacturers and alternative materials handling methods[30](index=30&type=chunk) - As of January 31, 2023, the company had approximately **8,200 employees**, with **6,700** in the Lift Truck division, **1,300** at Bolzoni, and **200** at Nuvera[37](index=37&type=chunk) [Item 1A. Risk Factors](index=10&type=section&id=Item%201A.%20RISK%20FACTORS) The company faces operational risks from supplier dependence, raw material costs, global operations, cyclical demand, cybersecurity, and family control - The company depends on a limited number of suppliers for critical components like engines and counterweights, and has experienced shortages that negatively affected production levels[61](index=61&type=chunk) - Significant increases in raw material costs (steel, lead, copper, rubber) due to inflation and supply constraints could materially reduce profitability[63](index=63&type=chunk) - The lift truck business is historically cyclical, with demand tied to general economic activity, where economic downturns can lead to significant fluctuations in revenues and net income[70](index=70&type=chunk) - The company faces cybersecurity risks to its IT infrastructure, which could disrupt business operations or result in data breaches[82](index=82&type=chunk) - As of December 31, 2022, members of the company's extended founding family held approximately **87%** of Class B common stock, representing **73%** of the total voting power, which could allow them to control the outcome of director elections and other significant corporate actions[91](index=91&type=chunk) [Item 1B. Unresolved Staff Comments](index=15&type=section&id=Item%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments - None[92](index=92&type=chunk) [Item 2. Properties](index=15&type=section&id=Item%202.%20PROPERTIES) The company operates numerous owned and leased facilities globally for assembly, manufacturing, distribution, and offices across its segments - The company operates principal assembly, manufacturing, distribution, and office facilities globally, which are both owned and leased across its Lift Truck, Bolzoni, and Nuvera segments[93](index=93&type=chunk) [Item 3. Legal Proceedings](index=15&type=section&id=Item%203.%20LEGAL%20PROCEEDINGS) The company is involved in various legal proceedings in the ordinary course of business but is not a party to any material ones - The Company is not a party to any material legal proceeding[94](index=94&type=chunk) [Item 4. Mine Safety Disclosures](index=15&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) The company reports no mine safety disclosures - None[95](index=95&type=chunk) [Item 4A. Information About Our Executive Officers](index=16&type=section&id=Item%204A.%20INFORMATION%20ABOUT%20OUR%20EXECUTIVE%20OFFICERS) This section provides information on the company's executive officers, including Alfred M. Rankin, Jr. as Chairman and CEO, and Rajiv K. Prasad as President - The report lists the names, ages, and positions of the company's executive officers, including Alfred M. Rankin, Jr. as Chairman and CEO, and Rajiv K. Prasad as President[97](index=97&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=16&type=section&id=Item%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's Class A common stock trades on the NYSE, with no public market for Class B stock, and no issuer purchases of equity securities have been made - Class A Common Stock is traded on the New York Stock Exchange (Symbol: HY), with no public trading market for Class B Common Stock[99](index=99&type=chunk) - As of December 31, 2022, there were approximately **813** Class A and **735** Class B common stockholders of record[100](index=100&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) In 2022, revenues increased to **$3.55 billion**, operating loss narrowed to **$(39.1) million**, and net loss improved to **$(74.1) million**, with a positive outlook for 2023 driven by backlog and moderating costs [Consolidated Financial Review](index=20&type=section&id=CONSOLIDATED%20FINANCIAL%20REVIEW) For 2022, consolidated revenues rose **15.4%** to **$3.55 billion**, operating loss decreased to **$(39.1) million** due to the absence of a goodwill impairment charge, and net loss improved to **$(74.1) million** Consolidated Results of Operations (2022 vs. 2021) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Revenues | $3,548.3 M | $3,075.7 M | | Gross Profit | $433.9 M | $363.4 M | | Operating Profit (Loss) | $(39.1) M | $(152.3) M | | Net Loss Attributable to Stockholders | $(74.1) M | $(173.0) M | | Diluted Loss per Share | $(4.38) | $(10.29) | - The reduction in operating loss in 2022 was mainly due to the absence of a **$55.6 million** non-cash goodwill impairment charge taken in JAPIC in 2021, increased gross profit in the lift truck business, and a lower operating loss at Nuvera[134](index=134&type=chunk) Lift Truck Unit Data | Metric | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Unit Shipments (thousands) | 100.8 | 94.9 | | Unit Bookings (thousands) | 97.6 | 159.6 | | Unit Backlog, end of period (thousands) | 102.1 | 105.3 | Operating Profit (Loss) by Segment (2022 vs. 2021) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | Americas | $46.8 M | $(19.7) M | | EMEA | $(46.6) M | $0.3 M | | JAPIC | $(10.6) M | $(67.5) M | | Bolzoni | $6.2 M | $(1.8) M | | Nuvera | $(34.3) M | $(62.3) M | [Liquidity and Capital Resources](index=24&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Liquidity improved in 2022 with **$40.6 million** in operating cash flow, supported by a **$300 million** revolving credit facility and a **$225 million** term loan, while total debt reached **$552.9 million** - Net cash provided by operating activities was **$40.6 million** in 2022, a significant improvement from the **$253.5 million** used in 2021, primarily due to a smaller increase in inventory compared to the prior year[142](index=142&type=chunk) - The company has a **$300.0 million** secured revolving credit facility expiring in June 2026 and a **$225.0 million** term loan maturing in May 2028[145](index=145&type=chunk) Capital Structure Summary | Metric | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $59.0 M | $65.5 M | | Total debt | $552.9 M | $518.5 M | | Total temporary and permanent equity | $225.1 M | $382.9 M | | Debt to total capitalization | 71 % | 58 % | Capital Expenditures | Year | Amount (in millions) | | :--- | :--- | | Planned 2023 | $65.2 | | Actual 2022 | $28.8 | | Actual 2021 | $44.3 | [Perspective and Outlook](index=28&type=section&id=PERSPECTIVE%20AND%20OUTLOOK) Despite an expected decline in the global lift truck market for 2023, the company anticipates a significant increase in revenues and a return to substantial operating profit, driven by higher-margin backlog and strategic initiatives - The global lift truck market is expected to decline in 2023 compared to 2022, but remain above pre-pandemic levels in most regions[166](index=166&type=chunk) - For 2023, the company expects a significant increase in revenues and a substantial operating profit, driven by shipping higher-margin backlog and abating cost inflation[172](index=172&type=chunk)[178](index=178&type=chunk) - Strategic initiatives include launching new modular, scalable lift trucks and testing a hydrogen fuel cell-powered container handler at the Port of Los Angeles[174](index=174&type=chunk) - Nuvera will continue to focus on placing its 45kW and 60kW fuel cell engines in heavy-duty vehicle applications, with a 2023 loss expected to be comparable to 2022[177](index=177&type=chunk) - Capital expenditures are expected to be approximately **$65 million** for 2023, a significant increase from 2022 levels, to maintain facilities and invest for long-term growth[179](index=179&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company manages interest rate risk with swaps and foreign currency risk with forward contracts, which had a net liability fair value of **$43.5 million** at year-end 2022 - The company is exposed to interest rate risk due to floating-rate financing arrangements and uses interest rate swap agreements to mitigate this exposure[185](index=185&type=chunk) - The company is subject to foreign currency exchange rate risk from international operations and uses forward foreign currency exchange contracts to partially reduce these risks, with a net liability fair value of **$43.5 million** at December 31, 2022[187](index=187&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=31&type=section&id=Item%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This item incorporates by reference the Financial Statements and Supplementary Data, which are detailed in Part IV of the Annual Report on Form 10-K - The required financial statements and supplementary data are set forth in Part IV of the report, beginning on page F-1[189](index=189&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=31&type=section&id=Item%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no disagreements with its accountants on accounting and financial disclosure for the three-year period ending December 31, 2022 - There were no disagreements with accountants on accounting and financial disclosure for the three-year period ended December 31, 2022[190](index=190&type=chunk) [Item 9A. Controls and Procedures](index=31&type=section&id=Item%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, a conclusion audited and supported by Ernst & Young, LLP - Management concluded that the Company's disclosure controls and procedures were effective as of the end of the reporting period[191](index=191&type=chunk) - Management concluded that the Company's internal control over financial reporting was effective as of December 31, 2022, a conclusion audited and supported by Ernst & Young, LLP[192](index=192&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=33&type=section&id=Item%2010.%20DIRECTORS,%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information on directors, executive officers, and corporate governance will be provided in the 2023 Proxy Statement and is incorporated by reference - Required information for this item will be included in the 2023 Proxy Statement and is incorporated by reference[198](index=198&type=chunk) [Item 11. Executive Compensation](index=33&type=section&id=Item%2011.%20EXECUTIVE%20COMPENSATION) Information regarding executive compensation will be included in the company's 2023 Proxy Statement and is incorporated by reference - Required information for this item will be included in the 2023 Proxy Statement and is incorporated by reference[200](index=200&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=33&type=section&id=Item%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information on security ownership will be provided in the 2023 Proxy Statement, with **936,515** Class A shares remaining available for future issuance under equity compensation plans as of December 31, 2022 - Required information for this item will be included in the 2023 Proxy Statement and is incorporated by reference[201](index=201&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2022) | Plan Category | Securities to Be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | **Class A Shares:** | | | | | Equity compensation plans approved by security holders | — | N/A | 936,515 | | **Class B Shares:** | | | | | Equity compensation plans approved by security holders | — | N/A | — | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=33&type=section&id=Item%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS,%20AND%20DIRECTOR%20INDEPENDENCE) Information regarding certain relationships, related transactions, and director independence will be included in the company's 2023 Proxy Statement and is incorporated by reference - Required information for this item will be included in the 2023 Proxy Statement and is incorporated by reference[203](index=203&type=chunk) [Item 14. Principal Accountant Fees and Services](index=33&type=section&id=Item%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Information regarding principal accountant fees and services will be included in the company's 2023 Proxy Statement and is incorporated by reference - Required information for this item will be included in the 2023 Proxy Statement and is incorporated by reference[204](index=204&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=34&type=section&id=Item%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K report, including articles of incorporation, material contracts, and required certifications - This item provides an index of all exhibits filed with the Form 10-K, including articles of incorporation, material contracts, and required certifications[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) [Item 16. Form 10-K Summary](index=36&type=section&id=Item%2016.%20FORM%2010-K%20SUMMARY) The company reports no Form 10-K summary - None[215](index=215&type=chunk) Financial Statements and Supplementary Data [Report of Independent Registered Public Accounting Firm](index=40&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP issued an unqualified opinion on Hyster-Yale's consolidated financial statements and internal control over financial reporting, identifying goodwill valuation for Bolzoni as a critical audit matter - Ernst & Young LLP provided an unqualified opinion, stating the financial statements are fairly presented in accordance with U.S. GAAP[227](index=227&type=chunk) - The auditors also expressed an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2022[228](index=228&type=chunk)[236](index=236&type=chunk) - A critical audit matter was identified concerning the valuation of goodwill for the Bolzoni reporting unit, due to the complex and subjective judgments involved in estimating its fair value[231](index=231&type=chunk)[232](index=232&type=chunk) [Consolidated Financial Statements](index=43&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show 2022 revenues of **$3.55 billion**, a net loss of **$74.1 million**, total assets of **$2.03 billion**, and positive operating cash flow of **$40.6 million** Consolidated Statements of Operations Highlights (in millions) | Account | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Revenues | $3,548.3 | $3,075.7 | $2,812.1 | | Gross Profit | $433.9 | $363.4 | $465.4 | | Operating Profit (Loss) | $(39.1) | $(152.3) | $49.9 | | Net Loss Attributable to Stockholders | $(74.1) | $(173.0) | $37.1 | Consolidated Balance Sheets Highlights (in millions) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $1,458.7 | $1,350.0 | | Total Assets | $2,026.2 | $1,970.1 | | Total Current Liabilities | $1,342.9 | $1,104.6 | | Total Liabilities | $1,801.1 | $1,587.2 | | Total Permanent Equity | $210.9 | $382.9 | Consolidated Statements of Cash Flows Highlights (in millions) | Account | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by (used for) operating activities | $40.6 | $(253.5) | $166.9 | | Net cash used for investing activities | $(35.4) | $(24.5) | $(43.7) | | Net cash provided by (used for) financing activities | $(10.9) | $193.6 | $(40.6) | [Notes to Consolidated Financial Statements](index=49&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial data, including a **$55.6 million** goodwill impairment in JAPIC and a **$10.0 million** fixed asset impairment in Nuvera in 2021, and **$133.2 million** in recourse obligations as of December 31, 2022 - In June 2022, the company purchased an additional **15%** equity interest in Hyster-Yale Maximal, bringing its ownership to **90%**, with an option to purchase the remaining **10%** interest[259](index=259&type=chunk) - In 2021, the company recognized a **$55.6 million** goodwill impairment charge for the JAPIC reporting unit and a **$10.0 million** impairment charge for Nuvera's fixed assets[347](index=347&type=chunk)[343](index=343&type=chunk) - As of December 31, 2022, the company had total recourse or repurchase obligations of **$133.2 million**, primarily to support financing for its customers and dealers, with **$116.5 million** of this related to its joint venture, HYGFS[373](index=373&type=chunk)[374](index=374&type=chunk) - The company has a valuation allowance of **$121.7 million** against its deferred tax assets of **$139.2 million** as of December 31, 2022, indicating uncertainty about the realization of these assets[296](index=296&type=chunk)

Financial Data and Key Metrics Changes - The consolidated revenues for Q3 2022 were $840 million, an increase of 12% or over $90 million compared to the prior year, driven by a 13% revenue increase in the Lift Truck business [16] - The company reported a consolidated operating loss of $24.9 million for Q3 2022, an improvement from an operating loss of $54.3 million in Q3 2021 [17] - The net loss for Q3 2022 was $37 million, compared to a net loss of $77 million in the prior year [17] Business Line Data and Key Metrics Changes - The Lift Truck business generated an operating loss of $15.3 million in Q3 2022, an improvement from a loss of $21.3 million in the prior year, driven by price increases that offset material and freight inflation [18] - Bolzoni reported an operating loss of $1.3 million in Q3 2022, compared to breakeven results in 2021, primarily due to lower sales volumes and higher manufacturing costs [19] - Nuvera's operating loss decreased to $9 million in Q3 2022 from a loss of $32.5 million in the prior year, although the loss increased due to product development costs [20] Market Data and Key Metrics Changes - The worldwide lift truck market is expected to decline in Q4 2022 and for the full year 2023 compared to prior year periods, although it remains above pre-pandemic levels [11] - The average sales price of a backlog unit increased by nearly 40% year-over-year and over 8% sequentially, supporting future unit margin expansion [12] Company Strategy and Development Direction - The company is focused on introducing new modular and scalable products and electrification of trucks, with ongoing projects in hydrogen fuel cell technology [26][27] - The strategic initiatives aim to improve margins and profitability, with a focus on managing costs and maintaining liquidity during the transitional period [25][28] Management's Comments on Operating Environment and Future Outlook - Management expects a modest operating profit in Q4 2022 and a return to solid operating profit and net income for the full year 2023, driven by improved margins and cash flow [24] - The company is optimistic about the easing of component shortages and the resolution of supply chain bottlenecks, which should support increased production and shipment volumes in 2023 [9][10] Other Important Information - The company generated cash and reduced net debt by nearly $30 million in Q3 2022, with cash on hand of $69 million and total debt of $545 million [22][23] - The CFO succession plan was discussed, with Scott Minder taking over from Kenneth Schilling, who will retire at the end of 2022 [29][30] Q&A Session Summary Question: Can you expand on the backlog serving as a shock absorber in any downturn? - Management noted that the extended backlog, while initially a challenge, is now seen as a protective advantage, allowing the company to maintain production levels through 2023 and into 2024 despite potential market downturns [33][34] Question: What is the focus on electrification and Nuvera's role? - The company is seeing strong customer interest in zero-emission solutions and is actively developing electric trucks and fuel cell technology, with ongoing projects in both North America and Europe [47][48] Question: How is the backlog structured geographically? - Backlogs are higher in North America compared to Europe, but both regions have extended backlogs that should sustain operations through economic slowdowns [64][65]

Hyster-Yale Materials Handling, Inc. (NYSE:HY) Q2 2022 Earnings Conference Call August 3, 2022 11:00 AM ET Company Participants Christina Kmetko - Investment Relations Alfred Rankin - Chairman & CEO Rajiv Prasad - President Kenneth Schilling - SVP, CFO & Treasurer Conference Call Participants Steve Ferazani - Sidoti & Company Chip Moore - EF Hutton Brett Kearney - GAMCO Investors Benjamin Thelen - Arosa Capital William Nicklin - Circle N Advisors Operator Hello, and welcome to the Hyster-Yale Q2 2022 Earnin ...

Q2 2022 INVESTOR PRESENTATION Transforming the way the world moves materials from Port to Home (rymaximal NUVERA Delivering tailored solutions through a portfolio of exceptional brands Safe Harbor Statement & Disclosure This presentation includes forward-looking comments subject to important risks and uncertainties. It may also contain financial measures that are not in conformance with accounting principles generally accepted in the United States of America (GAAP). Refer to Hyster-Yale's reports filed on F ...

[Part I: Financial Information](index=3&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements show increased assets but a significant net loss due to rising costs, though operating cash flow improved [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $2.05 billion while total equity sharply decreased due to a significant rise in liabilities Consolidated Balance Sheet Summary (in millions) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $1,469.8 | $1,350.0 | | **Total Assets** | $2,052.8 | $1,970.1 | | **Total Current Liabilities** | $1,329.4 | $1,104.6 | | **Total Liabilities** | $1,829.4 | $1,587.2 | | **Total Equity** | $207.5 | $382.9 | [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Despite revenue growth, the company reported a net loss of $19.4 million in Q2 2022, a reversal from a net income position in Q2 2021 Q2 and H1 2022 vs 2021 Performance (in millions, except per share data) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $895.4 | $765.6 | $1,723.0 | $1,497.8 | | **Gross Profit** | $99.1 | $116.4 | $200.3 | $234.8 | | **Operating Profit (Loss)** | $(15.7) | $5.9 | $(34.0) | $9.0 | | **Net Income (Loss) Attributable to Stockholders** | $(19.4) | $1.9 | $(44.4) | $7.5 | | **Diluted EPS** | $(1.15) | $0.11 | $(2.63) | $0.45 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow improved significantly to near breakeven for the first half of 2022 compared to a large cash use in the prior year Six Months Ended June 30 Cash Flow Summary (in millions) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | **Net cash provided by (used for) operating activities** | $0.2 | $(100.7) | | **Net cash provided by (used for) investing activities** | $(22.9) | $0.8 | | **Net cash provided by financing activities** | $33.5 | $37.5 | | **Increase (decrease) in Cash and Cash Equivalents** | $10.1 | $(63.9) | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail segment performance, revenue recognition, and significant derivative contracts for hedging market risks - The company operates through three main business units: Hyster-Yale Group (lift trucks), Bolzoni (attachments), and Nuvera (fuel cells)[16](index=16&type=chunk) Q2 2022 Segment Operating Profit (Loss) (in millions) | Segment | Q2 2022 Operating Profit (Loss) | | :--- | :--- | | Americas | $3.1 | | EMEA | $(10.8) | | JAPIC | $(4.0) | | Bolzoni | $3.4 | | Nuvera | $(7.9) | - The company holds forward foreign currency exchange contracts with a total notional amount of **$1.1 billion** and interest rate swap agreements with a notional amount of approximately **$201.8 million** as of June 30, 2022[48](index=48&type=chunk)[50](index=50&type=chunk) - The company has recourse or repurchase obligations totaling **$130.7 million** as of June 30, 2022, primarily related to customer financing arrangements[62](index=62&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses how revenue growth was offset by cost inflation, leading to an operating loss, but maintains a robust backlog [Financial Review](index=26&type=section&id=Financial%20Review) Q2 2022 revenue rose 17.0% YoY, but an operating loss resulted from material and freight cost inflation outpacing price increases Components of Revenue Change - Q2 2022 vs Q2 2021 (in millions) | Component | Change | | :--- | :--- | | Price | $59.9 | | Unit volume and product mix | $54.2 | | Parts | $19.9 | | Foreign currency | $(19.4) | | **Total Change** | **$129.8** | - The decrease in Q2 operating profit was primarily driven by significant material and freight cost inflation and manufacturing inefficiencies totaling **$85.9 million**, which more than offset the favorable impact of improved pricing[82](index=82&type=chunk) Unit Backlog and Approximate Sales Value | Metric | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Unit Backlog (thousands) | 112.0 | 84.9 | | Backlog Value (millions) | $3,530 | $2,070 | [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by improved operating cash flow and available credit facilities, deemed sufficient for the next year - Operating cash flow improved by **$100.9 million** in H1 2022 compared to H1 2021, primarily due to a smaller increase in inventory levels and an increase in customer down payments[100](index=100&type=chunk) - At June 30, 2022, the company had **$165.7 million** of borrowings outstanding under its main revolving credit facility, with **$130.0 million** of availability[103](index=103&type=chunk) - Capital expenditures for 2022 are planned to be approximately **$33.4 million**, a reduction from $44.3 million in 2021, to protect liquidity[113](index=113&type=chunk) [Outlook and Strategic Perspective](index=33&type=section&id=Outlook%20and%20Strategic%20Perspective) The company anticipates a larger Q3 loss but a return to profitability in Q4, driven by strategic product launches and pricing actions - The company anticipates a larger net loss in Q3 2022 but expects to **return to net income in Q4 2022**, however, the Q4 profit is not expected to offset losses from the first nine months[115](index=115&type=chunk) - The company is managing liquidity by controlling 2022 capital expenditures (approx. **$33 million**) and operating expenses, and expects to significantly reduce inventory in the second half of 2022[116](index=116&type=chunk) - Core strategies for the Lift Truck business focus on: 1) providing the lowest cost of ownership with new modular products, 2) leading in industry-focused solutions, and 3) leading in independent distribution[122](index=122&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk exposures since the end of the previous fiscal year - There have been **no material changes** in the Company's market risk exposures since December 31, 2021[131](index=131&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls during the quarter - Based on an evaluation, the principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were **effective** as of June 30, 2022[132](index=132&type=chunk) - **No changes** in internal control over financial reporting occurred during the second quarter of 2022 that materially affected, or are reasonably likely to materially affect, these controls[133](index=133&type=chunk) [Part II: Other Information](index=37&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings for the period - There are **no material legal proceedings** to report[135](index=135&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) No material changes were reported to the risk factors previously disclosed in the 2021 Annual Report - **No material changes** have been made to the risk factors disclosed in the 2021 Annual Report on Form 10-K[135](index=135&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including required officer certifications and XBRL data - The exhibits filed with this report include certifications from the CEO and CFO pursuant to SEC rules and the Sarbanes-Oxley Act, as well as Inline XBRL documents[136](index=136&type=chunk)

Financial Data and Key Metrics Changes - The company reported consolidated revenues of $827.6 million, a 13% increase from $732.2 million in the prior year, driven by improved pricing and higher unit volumes [12][13] - Despite higher revenues, the company experienced an operating loss of $18.3 million compared to an operating profit of $3.1 million in the prior year, primarily due to material and freight cost inflation totaling $68.6 million [13][15] - The consolidated net loss was $25 million, a decline from net income of $5.6 million in the prior year quarter [15] Business Line Data and Key Metrics Changes - The Lift Truck business reported an operating loss of $10.7 million, down from an operating profit of $12.2 million in the prior year, affected by increased costs and production delays [16] - Bolzoni's revenues increased by 19.6%, with operating profit improving to $2.1 million from $800,000 in the prior year, attributed to higher sales volumes and price increases [18] - Nuvera's revenue increased to $600,000, with the operating loss decreasing to $8.1 million from $9.8 million in the prior year, due to improved margins from lower production costs [19] Market Data and Key Metrics Changes - The Lift Truck market saw an 8.1% increase in bookings over the fourth quarter of 2021, although bookings were lower than the historically high prior year first quarter [11] - The company ended the quarter with a record backlog of 114,100 units, indicating strong customer demand [12] Company Strategy and Development Direction - The company is focused on managing supply chain challenges and improving margins in its backlog, particularly for new orders [27][30] - Strategic initiatives include the introduction of modular, scalable products and enhancing sales approaches [33] - The company anticipates a substantial profit in the fourth quarter of 2022, driven by improved margins and increased production as supply chain issues are resolved [41] Management's Comments on Operating Environment and Future Outlook - Management noted that the ongoing Russia-Ukraine conflict and COVID-related lockdowns in China are significant factors affecting supply chain stability and cost inflation [10][26] - The company expects to experience lower margins in the second quarter due to increased costs but anticipates stronger margins in the second half of 2022 [31][39] - Management remains confident in the long-term strategies and believes that once supply chain challenges are resolved, the company will deliver solid sales and earnings performance [52] Other Important Information - The company has implemented strict controls over operating expenses to protect liquidity and reduce cash outflow [46] - As of March 31, 2022, the company had cash on hand of $65.1 million and debt of $479 million, reflecting a decrease in debt levels due to an advanced dealer deposit program [47][48] Q&A Session Summary Question: Shipping trends and component shortages - Management indicated that production increases are dependent on component availability, with some easing observed but ongoing challenges remain due to the Russia-Ukraine conflict and COVID lockdowns in China [55][56] Question: Bookings and future expectations - Bookings remain strong, higher than expected, but management is cautious about future booking levels and aims to balance production with market demand to reduce lead times [63][66] Question: Lift Truck Americas gross margins sustainability - Management clarified that the strong margins seen in the first quarter are not expected to be sustained in the second quarter due to pressures from backlog mix and increased costs [69][70] Question: Nuvera's bookings pipeline and European dynamics - Management noted increased attention to hydrogen and fuel cells in Europe due to energy security concerns, with a growing pipeline in that region [80][84]

Part I. Financial Information This section presents the unaudited condensed consolidated financial statements and management's analysis for Q1 2022 [Item 1. Financial Statements](index=3&type=section&id=Item%201%20Financial%20Statements) The financial statements for Q1 2022 reveal a shift from net income to a net loss, driven by lower gross profit, increased operating expenses, and higher interest costs, while liquidity remains stable despite decreased total equity [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Balance sheets show increased assets and liabilities, decreased equity, and changes in current assets and deferred revenue Unaudited Condensed Consolidated Balance Sheets (In millions) | Metric | March 31, 2022 | December 31, 2021 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | Total Current Assets | $1,446.0 | $1,350.0 | +$96.0 | | Total Assets | $2,057.3 | $1,970.1 | +$87.2 | | Total Current Liabilities | $1,232.6 | $1,104.6 | +$128.0 | | Total Liabilities | $1,705.8 | $1,587.2 | +$118.6 | | Total Stockholders' Equity | $324.9 | $357.1 | -$32.2 | | Total Equity | $351.5 | $382.9 | -$31.4 | - Deferred revenue significantly increased from **$49.7 million** at December 31, 2021, to **$130.1 million** at March 31, 2022, indicating higher customer prepayments[5](index=5&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Statements of operations show a shift from net income to net loss in Q1 2022 due to reduced gross profit and higher operating expenses Unaudited Condensed Consolidated Statements of Operations (Three Months Ended March 31, In millions, except per share data) | Metric | 2022 | 2021 | Change | | :------------------------------------ | :----- | :----- | :----- | | Revenues | $827.6 | $732.2 | +$95.4 | | Gross Profit | $101.2 | $118.4 | -$17.2 | | Operating Profit (Loss) | $(18.3) | $3.1 | -$21.4 | | Net Income (Loss) Attributable to Stockholders | $(25.0) | $5.6 | -$30.6 | | Basic Earnings (Loss) per Share | $(1.48) | $0.33 | -$1.81 | | Dividends per Share | $0.3225 | $0.3175 | +$0.005 | - The company experienced a significant decline in profitability, moving from an operating profit of **$3.1 million** in Q1 2021 to an operating loss of **$18.3 million** in Q1 2022, and a net loss attributable to stockholders of **$25.0 million** compared to a net income of **$5.6 million** in the prior year[6](index=6&type=chunk) [Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive loss improved in Q1 2022 due to smaller negative impacts from foreign currency and cash flow hedging, despite a larger net loss Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) (Three Months Ended March 31, In millions) | Metric | 2022 | 2021 | Change | | :---------------------------------------------------- | :----- | :----- | :----- | | Net Income (Loss) | $(24.2) | $6.1 | -$30.3 | | Foreign currency translation adjustment | $(4.6) | $(24.8) | +$20.2 | | Current period cash flow hedging activity | $(1.8) | $(14.3) | +$12.5 | | Comprehensive Loss | $(27.7) | $(32.5) | +$4.8 | | Comprehensive Loss Attributable to Stockholders | $(28.5) | $(32.0) | +$3.5 | - The comprehensive loss improved slightly from **$(32.5) million** in Q1 2021 to **$(27.7) million** in Q1 2022, primarily due to a smaller negative impact from foreign currency translation adjustments and cash flow hedging activities, despite a larger net loss[8](index=8&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated significant cash in Q1 2022, improving from prior year, while financing activities increased cash usage Unaudited Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, In millions) | Activity | 2022 | 2021 | Change | | :------------------------------------------ | :----- | :----- | :----- | | Net cash provided by (used for) operating activities | $59.1 | $(47.1) | +$106.2 | | Net cash provided by (used for) investing activities | $(9.3) | $9.5 | -$18.8 | | Net cash used for financing activities | $(50.9) | $(8.0) | -$42.9 | | Balance at the end of the period | $65.1 | $103.0 | -$37.9 | - Operating activities generated **$59.1 million** in cash in Q1 2022, a significant improvement from a cash usage of **$47.1 million** in Q1 2021, mainly due to favorable working capital changes, particularly lower inventory purchases and increased other liabilities[10](index=10&type=chunk) - Cash used for financing activities increased to **$50.9 million** in Q1 2022 from **$8.0 million** in Q1 2021, primarily due to higher repayments on revolving credit facilities[10](index=10&type=chunk) [Unaudited Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total stockholders' equity decreased in Q1 2022, primarily due to the net loss for the period and cash dividends paid Unaudited Condensed Consolidated Statements of Changes in Equity (In millions) | Metric | Balance, Dec 31, 2021 | Stock-based compensation | Net income (loss) | Cash dividends | Current period other comprehensive loss | Reclassification adjustment to net income (loss) | Balance, Mar 31, 2022 | | :---------------------- | :-------------------- | :----------------------- | :---------------- | :------------- | :-------------------------------------- | :--------------------------------------------- | :-------------------- | | Total Stockholders' Equity | $357.1 | $1.7 | $(25.0) | $(5.4) | $(6.4) | $2.9 | $324.9 | - Total Stockholders' Equity decreased by **$32.2 million** from **$357.1 million** at December 31, 2021, to **$324.9 million** at March 31, 2022, primarily due to the net loss for the period and cash dividends paid[12](index=12&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on accounting policies, financial instruments, and other significant financial information [Note 1. Basis of Presentation](index=8&type=section&id=Note%201%E2%80%94Basis%20of%20Presentation) This note outlines the company's business operations, including its core products and equity method investments - Hyster-Yale Materials Handling, Inc. (the "Company") designs, engineers, manufactures, sells, and services lift trucks, attachments (Bolzoni), and hydrogen fuel cell stacks/engines (Nuvera) globally[15](index=15&type=chunk) - The Company accounts for investments in Sumitomo NACCO Forklift Co., Ltd. (**50%-owned**) and HYG Financial Services, Inc. (**20%-owned**) using the equity method[16](index=16&type=chunk) [Note 2. Recently Issued Accounting Standards](index=8&type=section&id=Note%202%E2%80%94Recently%20Issued%20Accounting%20Standards) This note discusses the adoption status of recent accounting standard updates and ongoing evaluations - As of January 1, 2022, the Company did not adopt any recent accounting standard updates that had a material effect on its financial position, results of operations, cash flows, or related disclosures[18](index=18&type=chunk) - The Company is currently evaluating ASU 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform[19](index=19&type=chunk) [Note 3. Revenue Recognition](index=9&type=section&id=Note%203%E2%80%94Revenue) This note details the company's revenue recognition policies, disaggregated revenue by category, and deferred revenue balances - Revenue is recognized when control of goods (trucks, parts) or services is transferred to the customer, typically at a point in time for sales and over time for service contracts[20](index=20&type=chunk)[21](index=21&type=chunk) Disaggregated Revenue by Category (Three Months Ended March 31, 2022, In millions) | Category | Americas | EMEA | JAPIC | Bolzoni | Nuvera | Eliminations | Total | | :--------------- | :------- | :----- | :---- | :------ | :----- | :----------- | :---- | | Dealer sales | $289.9 | $130.6 | $46.7 | $— | $— | $— | $467.2 | | Direct customer sales | $99.5 | $6.1 | $— | $— | $— | $— | $105.6 | | Aftermarket sales | $145.1 | $27.6 | $4.9 | $— | $— | $— | $177.6 | | Other | $23.2 | $5.4 | $0.1 | $95.1 | $0.6 | $(47.2) | $77.2 | | **Total Revenues** | **$557.7** | **$169.7** | **$51.7** | **$95.1** | **$0.6** | **$(47.2)** | **$827.6** | Deferred Revenue (In millions) | Metric | Amount | | :------------------------ | :----- | | Balance, December 31, 2021 | $76.2 | | Customer deposits and billings | $88.8 | | Revenue recognized | $(11.4) | | Foreign currency effect | $1.0 | | Balance, March 31, 2022 | $154.6 | [Note 4. Business Segments](index=10&type=section&id=Note%204%E2%80%94Business%20Segments) This note outlines the company's reportable business segments and their respective operating profit or loss contributions - The Company's reportable segments include three lift truck business units (Americas, EMEA, JAPIC) and two separate businesses (Bolzoni and Nuvera)[29](index=29&type=chunk)[30](index=30&type=chunk) Segment Operating Profit (Loss) (Three Months Ended March 31, In millions) | Segment | 2022 | 2021 | Change | | :---------------- | :----- | :----- | :----- | | Americas | $4.4 | $14.6 | -$10.2 | | EMEA | $(11.4) | $0.1 | -$11.5 | | JAPIC | $(3.7) | $(2.5) | -$1.2 | | Lift truck business | $(10.7) | $12.2 | -$22.9 | | Bolzoni | $2.1 | $0.8 | +$1.3 | | Nuvera | $(8.1) | $(9.8) | +$1.7 | | Eliminations | $(1.6) | $(0.1) | -$1.5 | | **Total** | **$(18.3)** | **$3.1** | **-$21.4** | [Note 5. Income Taxes](index=11&type=section&id=Note%205%E2%80%94Income%20Taxes) This note explains the company's income tax provision, its reconciliation, and the factors influencing the reported income tax rate - The income tax provision is based on a forecasted annual income tax rate, with discrete items reflected in the period they occur[32](index=32&type=chunk)[33](index=33&type=chunk) Income Tax Provision Reconciliation (Three Months Ended March 31, In millions) | Metric | 2022 | 2021 | | :-------------------------- | :----- | :----- | | Income (loss) before income taxes | $(21.3) | $8.5 | | Statutory taxes (21%) | $(4.5) | $1.8 | | Valuation allowance | $10.9 | $0.4 | | Income tax provision | $2.9 | $2.4 | | Reported income tax rate | (13.6)% | 28.2% | - The reported income tax rate for Q1 2022 was **(13.6)%**, differing from the U.S. federal statutory rate primarily due to additional valuation allowances and an interim adjustment from pretax losses for which no tax benefit was recognized[34](index=34&type=chunk) [Note 6. Reclassifications from OCI](index=12&type=section&id=Note%206%E2%80%94Reclassifications%20from%20OCI) This note details reclassifications from other comprehensive income to net income, primarily driven by cash flow hedges Reclassifications from OCI to Net Income (Loss) (Three Months Ended March 31, In millions) | OCI Component | Affected Line Item | 2022 (Net of tax) | 2021 (Net of tax) | | :------------------------------------ | :----------------- | :---------------- | :---------------- | | Gain (loss) on cash flow hedges | Net income (loss) | $(1.7) | $0.6 | | Amortization of defined benefit pension items | Net income (loss) | $(1.2) | $(1.1) | | **Total reclassifications for the period** | | **$(2.9)** | **$(0.5)** | - Total reclassifications from OCI to net income (loss) resulted in a **$(2.9) million** impact in Q1 2022, compared to **$(0.5) million** in Q1 2021, primarily driven by losses on cash flow hedges[35](index=35&type=chunk) [Note 7. Financial Instruments and Derivative Financial Instruments](index=12&type=section&id=Note%207%E2%80%94Financial%20Instruments%20and%20Derivative%20Financial%20Instruments) This note describes the company's use of derivative financial instruments to manage foreign currency and interest rate risks and their fair values - The Company uses forward foreign currency exchange contracts and interest rate swap agreements to manage risks related to foreign currency transactions and floating rate debt[38](index=38&type=chunk)[41](index=41&type=chunk) - At March 31, 2022, the fair value of revolving credit agreements and long-term debt was **$449.8 million**, approximating its carrying value of **$450.9 million**[37](index=37&type=chunk) Fair Value of Derivative Instruments (In millions) | Derivative Type | March 31, 2022 (Net Liability) | December 31, 2021 (Net Liability) | | :-------------------------------- | :----------------------------- | :-------------------------------- | | Foreign currency exchange contracts | $39.6 | $26.7 | | Interest rate swap agreements | $(6.2) (Net Asset) | $3.2 | [Note 8. Retirement Benefit Plans](index=16&type=section&id=Note%208%E2%80%94Retirement%20Benefit%20Plans) This note details the company's defined benefit pension plans and the components of pension income or expense - The Company maintains defined benefit pension plans, with benefits frozen for U.S. and U.K. plans, and only certain Netherlands employees still earning benefits[51](index=51&type=chunk)[52](index=52&type=chunk) Components of Pension (Income) Expense (Three Months Ended March 31, In millions) | Component | 2022 | 2021 | | :-------------------------- | :----- | :----- | | U.S. Pension Total | $(0.1) | $(0.3) | | Non-U.S. Pension Total | $(0.3) | $(1.1) | | **Total Pension (Income) Expense** | **$(0.4)** | **$(1.4)** | [Note 9. Inventories](index=17&type=section&id=Note%209%E2%80%94Inventories) This note describes the valuation methods for inventories and provides a breakdown of inventory categories - Inventories are valued at the lower of cost or market for LIFO (**48%** of total inventories at March 31, 2022) and lower of cost or net realizable value for FIFO (all other inventories)[55](index=55&type=chunk) Inventories (In millions) | Category | March 31, 2022 | December 31, 2021 | | :------------------------ | :------------- | :---------------- | | Finished goods and service parts | $362.5 | $321.6 | | Work in process | $37.4 | $32.9 | | Raw materials | $520.8 | $509.9 | | Total manufactured inventories | $920.7 | $864.4 | | LIFO reserve | $(94.3) | $(83.4) | | **Total inventory** | **$826.4** | **$781.0** | [Note 10. Product Warranties](index=17&type=section&id=Note%2010%E2%80%94Product%20Warranties) This note explains the company's product warranty policies and the changes in warranty obligations - The Company provides standard and separately priced extended warranties for its lift trucks, with liabilities accrued at the time of revenue recognition[56](index=56&type=chunk)[57](index=57&type=chunk) Changes in Warranty Obligations (In millions) | Metric | 2022 | | :------------------------------------ | :----- | | Balance at December 31, 2021 | $64.7 | | Current year warranty expense | $8.3 | | Change in estimate related to pre-existing warranties | $(0.8) | | Payments made | $(10.0) | | **Balance at March 31, 2022** | **$62.2** | [Note 11. Contingencies](index=18&type=section&id=Note%2011%E2%80%94Contingencies) This note addresses the company's exposure to legal and regulatory proceedings and management's assessment of potential material costs - The Company is subject to various legal and regulatory proceedings, but management believes the likelihood of incurring material costs in excess of recognized accruals is remote[60](index=60&type=chunk) [Note 12. Guarantees](index=18&type=section&id=Note%2012%E2%80%94Guarantees) This note details the company's recourse and repurchase obligations for customer financing and guarantees related to affiliate debt - The Company provides recourse or repurchase obligations for customer financing, totaling **$120.2 million** at March 31, 2022, with collateral valued at approximately **$184.4 million**[61](index=61&type=chunk) - A significant portion (**$100.0 million**) of these obligations relates to transactions with HYGFS, and the Company also guarantees **20%** of HYGFS' debt with Wells Fargo, amounting to an incremental obligation of **$199.8 million**[62](index=62&type=chunk) Total Exposure Related to Guarantees (March 31, 2022, In millions) | Category | HYGFS | Total | | :------------------------------------ | :---- | :---- | | Total recourse or repurchase obligations | $100.0 | $120.2 | | Incremental obligation related to guarantee to WF | $199.8 | $199.8 | | **Total exposure related to guarantees** | **$290.2** | **$310.4** | [Note 13. Equity and Debt Investments](index=19&type=section&id=Note%2013%E2%80%94Equity%20and%20Debt%20Investments) This note provides information on the company's equity investments in unconsolidated affiliates and a debt investment - The Company holds equity investments in HYGFS (**20%**) and SN (**50%**), accounted for using the equity method, and a debt investment in OneH2, Inc. (**$0.8 million**)[65](index=65&type=chunk)[67](index=67&type=chunk) Equity Investments in Unconsolidated Affiliates (In millions) | Affiliate | March 31, 2022 | December 31, 2021 | | :-------- | :------------- | :---------------- | | HYGFS | $17.6 | $25.2 | | SN | $40.8 | $43.7 | | Bolzoni | $0.3 | $0.3 | Dividends Received from Unconsolidated Affiliates (Three Months Ended March 31, In millions) | Affiliate | 2022 | 2021 | | :-------- | :--- | :--- | | HYGFS | $10.3 | $5.1 | | SN | $0.7 | $0.4 | | **Total** | **$11.0** | **$5.5** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The Company faced a challenging Q1 2022 with increased revenues but a significant operating loss due to cost inflation and supply chain issues, yet anticipates gradual profitability improvement and a return to substantial profit by Q4 through strategic initiatives [Company Overview](index=21&type=section&id=Company%20Overview) This section provides an overview of Hyster-Yale Materials Handling, Inc.'s global operations and business scope - Hyster-Yale Materials Handling, Inc. is a leading global lift truck manufacturer, offering a comprehensive line of lift trucks, attachments (Bolzoni), and hydrogen fuel cell power products (Nuvera)[69](index=69&type=chunk)[70](index=70&type=chunk) - The materials handling business is cyclical, influenced by general economic activity, and the Company expects to increase its ownership in Hyster-Yale Maximal to **100%** by exercising an option prior to June 8, 2056[69](index=69&type=chunk) [Critical Accounting Policies and Estimates](index=21&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section confirms no material changes to the company's critical accounting policies and estimates since the last annual report - There have been no material changes to the Company's Critical Accounting Policies and Estimates since December 31, 2021, as disclosed in its Annual Report on Form 10-K[71](index=71&type=chunk) [Financial Review](index=22&type=section&id=FINANCIAL%20REVIEW) This section provides a detailed analysis of the company's revenues, operating profit, and net income for Q1 2022 compared to the prior year [Revenues Analysis (Q1 2022 vs Q1 2021)](index=24&type=section&id=First%20Quarter%20of%202022%20Compared%20with%20First%20Quarter%20of%202021%20-%20Revenues) This analysis details the drivers behind the company's revenue changes across segments in Q1 2022 compared to Q1 2021 Revenues (Three Months Ended March 31, In millions) | Segment | 2022 | 2021 | % Change | | :---------------- | :----- | :----- | :------- | | Americas | $557.7 | $459.7 | 21.3% | | EMEA | $169.7 | $170.7 | (0.6)% | | JAPIC | $51.7 | $60.5 | (14.5)% | | Lift truck business | $779.1 | $690.9 | 12.8% | | Bolzoni | $95.1 | $79.5 | 19.6% | | Nuvera | $0.6 | $— | n.m. | | **Total** | **$827.6** | **$732.2** | **13.0%** | - Total revenues increased by **13.0%** to **$827.6 million** in Q1 2022, driven by improved pricing (**$43.9 million**) and higher unit and parts volume (**$24.1 million** for unit volume and product mix, **$21.9 million** for parts), partially offset by unfavorable foreign currency movements (**$14.0 million**)[77](index=77&type=chunk) - Americas revenues increased by **21.3%** due to higher pricing and unit/parts volume, while JAPIC revenues decreased by **14.5%** due to lower unit and parts volumes[78](index=78&type=chunk)[79](index=79&type=chunk) [Operating Profit (Loss) Analysis (Q1 2022 vs Q1 2021)](index=24&type=section&id=First%20Quarter%20of%202022%20Compared%20with%20First%20Quarter%20of%202021%20-%20Operating%20Profit%20(Loss)) This analysis examines the factors contributing to the company's shift from operating profit to a significant operating loss in Q1 2022 Operating Profit (Loss) (Three Months Ended March 31, In millions) | Segment | 2022 | 2021 | % Change | | :---------------- | :----- | :----- | :------- | | Americas | $4.4 | $14.6 | (69.9)% | | EMEA | $(11.4) | $0.1 | n.m. | | JAPIC | $(3.7) | $(2.5) | (48.0)% | | Lift truck business | $(10.7) | $12.2 | (187.7)% | | Bolzoni | $2.1 | $0.8 | 162.5% | | Nuvera | $(8.1) | $(9.8) | 17.3% | | **Total** | **$(18.3)** | **$3.1** | **n.m.** | - The Company reported an operating loss of **$18.3 million** in Q1 2022, a significant decline from an operating profit of **$3.1 million** in Q1 2021, primarily due to lower gross profit in the lift truck business[80](index=80&type=chunk) - Gross profit decreased mainly due to **$68.6 million** in material and freight cost inflation and manufacturing inefficiencies from supply chain constraints, which more than offset the **$43.9 million** benefit from improved pricing[80](index=80&type=chunk) - EMEA recognized an operating loss of **$11.4 million**, including **$2.5 million** in charges related to Russian orders, while Bolzoni's operating profit increased by **162.5%** due to higher unit volume and pricing[82](index=82&type=chunk)[84](index=84&type=chunk) [Net Income (Loss) Attributable to Stockholders Analysis (Q1 2022 vs Q1 2021)](index=25&type=section&id=First%20Quarter%20of%202022%20Compared%20with%20First%20Quarter%20of%202021%20-%20Net%20Income%20(Loss)%20Attributable%20to%20Stockholders) This analysis details the reasons for the company's shift from net income to a net loss attributable to stockholders in Q1 2022 Net Income (Loss) Attributable to Stockholders (Three Months Ended March 31, In millions) | Segment | 2022 | 2021 | % Change | | :---------------- | :----- | :----- | :------- | | Americas | $1.1 | $9.5 | (88.4)% | | EMEA | $(7.0) | $0.9 | n.m. | | JAPIC | $(4.0) | $(2.2) | (81.8)% | | Lift truck business | $(9.9) | $8.2 | n.m. | | Bolzoni | $1.3 | $0.6 | 116.7% | | Nuvera | $(8.1) | $(3.8) | (113.2)% | | **Total** | **$(25.0)** | **$5.6** | **n.m.** | - Net loss attributable to stockholders was **$25.0 million** in Q1 2022, compared to net income of **$5.6 million** in Q1 2021, primarily due to lower lift truck operating profit, absence of a **$4.6 million** gain on sale of investment, higher interest expense, and unfavorable mark-to-market adjustments[86](index=86&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section reviews the company's cash flow activities, financing, capital expenditures, and overall capital structure [Cash Flows Analysis](index=25&type=section&id=Cash%20Flows) This analysis highlights the significant improvement in operating cash flow and the shift in investing activities during Q1 2022 Net Cash Flow Activities (Three Months Ended March 31, In millions) | Activity | 2022 | 2021 | Change | | :------------------------------------------ | :----- | :----- | :----- | | Net cash provided by (used for) operating activities | $59.1 | $(47.1) | +$106.2 | | Net cash provided by (used for) investing activities | $(9.3) | $9.5 | -$18.8 | | Net cash used for financing activities | $(50.9) | $(8.0) | -$42.9 | | Cash flow before financing activities | $49.8 | $(37.6) | +$87.4 | - Operating cash flow improved significantly by **$106.2 million**, primarily due to an increase in other liabilities from customer down payments and lower inventory purchases[88](index=88&type=chunk) - Investing activities shifted from providing **$9.5 million** in cash in Q1 2021 to using **$9.3 million** in Q1 2022, mainly due to the absence of proceeds from the sale of OneH2 preferred shares (**$15.7 million**) in the current period[89](index=89&type=chunk) [Financing Activities](index=26&type=section&id=Financing%20Activities) This section details the company's financing activities, including credit facilities and debt outstanding, and its compliance with covenants - Net cash used for financing activities increased to **$50.9 million** in Q1 2022 from **$8.0 million** in Q1 2021, primarily due to repayments on the **$300.0 million** secured revolving credit facility (the "Facility")[90](index=90&type=chunk)[91](index=91&type=chunk) - At March 31, 2022, the Company had **$101.0 million** outstanding under the Facility, with **$194.5 million** of unused borrowing capacity, and was in compliance with all restrictive covenants[91](index=91&type=chunk)[93](index=93&type=chunk) - The Company also has a **$225.0 million** term loan, with **$223.3 million** principal outstanding at March 31, 2022, and believes current liquidity sources are sufficient for its operating needs[94](index=94&type=chunk)[99](index=99&type=chunk) [Contractual Obligations, Contingent Liabilities and Commitments](index=27&type=section&id=Contractual%20Obligations%2C%20Contingent%20Liabilities%20and%20Commitments) This section confirms no significant changes in the company's contractual obligations or commercial commitments since the last fiscal year-end - There have been no significant changes in the total amount or timing of the Company's contractual obligations or commercial commitments since December 31, 2021[100](index=100&type=chunk) [Capital Expenditures](index=27&type=section&id=Capital%20Expenditures) This section outlines the company's planned capital expenditures for 2022 and their financing sources Capital Expenditures (In millions) | Segment | Three Months Ended March 31, 2022 | Planned for Remainder of 2022 | Planned 2022 Total | Actual 2021 | | :---------------- | :-------------------------------- | :---------------------------- | :----------------- | :---------- | | Lift truck business | $7.5 | $12.3 | $19.8 | $30.6 | | Bolzoni | $1.8 | $3.4 | $5.2 | $10.4 | | Nuvera | $0.4 | $3.5 | $3.9 | $3.3 | | **Total** | **$9.7** | **$19.2** | **$28.9** | **$44.3** | - Planned capital expenditures for 2022 are approximately **$28.9 million**, primarily for product development, IT infrastructure, and manufacturing improvements, to be financed by internally generated funds and bank financing[101](index=101&type=chunk) [Capital Structure](index=27&type=section&id=Capital%20Structure) This section presents the company's cash, debt, and equity balances, along with its debt to total capitalization ratio Capital Structure (In millions) | Metric | March 31, 2022 | December 31, 2021 | Change | | :-------------------- | :------------- | :---------------- | :----- | | Cash and cash equivalents | $65.1 | $65.5 | $(0.4) | | Total debt | $(479.0) | $(518.5) | +$39.5 | | Total equity | $351.5 | $382.9 | $(31.4) | | Debt to total capitalization | 58% | 58% | —% | - Total debt decreased by **$39.5 million** to **$479.0 million** at March 31, 2022, while total equity decreased by **$31.4 million**, maintaining a stable debt to total capitalization ratio of **58%**[102](index=102&type=chunk) [Outlook and Strategic Perspective](index=28&type=section&id=OUTLOOK%20AND%20STRATEGIC%20PERSPECTIVE) This section provides the company's forward-looking statements on expected financial performance and strategic initiatives across its business segments [Consolidated Outlook](index=28&type=section&id=Consolidated%20Outlook) This outlook details expected net losses in Q2 and Q3 2022, followed by substantial net income in Q4, influenced by ongoing market challenges - The Company expects a larger net loss in Q2 2022, a lower but substantial net loss in Q3, and substantial net income in Q4, but Q4 profit is not expected to offset losses from the first nine months[103](index=103&type=chunk) - This outlook is influenced by continued component shortages, significant material and freight cost inflation, the Russia/Ukraine conflict, and ongoing losses at Nuvera[103](index=103&type=chunk) - Liquidity protection is a priority, with expected 2022 capital expenditures of **$29 million** and strict controls over operating expenses, including delays in strategic program investments[104](index=104&type=chunk) [Lift Truck Strategic Perspective](index=28&type=section&id=Lift%20Truck%20Strategic%20Perspective) This perspective outlines expectations for the global lift truck market, shipment forecasts, margin improvements, and core strategic initiatives - The global lift truck market is expected to decline from 2021 highs but remain above pre-pandemic levels, leading to an anticipated substantial decrease in bookings for the remainder of 2022[106](index=106&type=chunk) - Full-year shipments are expected to increase significantly in 2022 due to a robust backlog and mitigation efforts for supply chain constraints, despite ongoing component shortages and the Russia/Ukraine conflict[107](index=107&type=chunk) - The Lift Truck business expects lower margins in Q2 2022 due to a lag between price increases and revenue realization, with margins improving in the second half and substantial profit in Q4 as higher-margin orders are shipped[108](index=108&type=chunk) - Core strategies include providing the lowest cost of ownership (modular products, electrification, automation), leading in industry- and customer-focused solutions, and being a leader in independent distribution[111](index=111&type=chunk) [Bolzoni Strategic Perspective](index=30&type=section&id=Bolzoni%20Strategic%20Perspective) This perspective details Bolzoni's expected operating profit and net income trends, along with its strategic focus areas for market growth - Bolzoni expects lower operating profit and net income in Q2 2022 compared to Q1, but significantly higher than the prior-year loss, with improving profits in Q3 and Q4 as component shortages moderate and pricing actions take effect[113](index=113&type=chunk) - Strategic focus includes implementing the "One Company - 3 Brands" approach, strengthening North America and JAPIC commercial operations, and increasing sales in key attachment industries[114](index=114&type=chunk) [Nuvera Strategic Perspective](index=30&type=section&id=Nuvera%20Strategic%20Perspective) This perspective outlines Nuvera's continued focus on commercializing hydrogen fuel cell engines and expectations for reduced losses in 2022 - Nuvera continues to focus on commercializing its **45kW** and **60kW** hydrogen fuel cell engines for niche, heavy-duty vehicle applications and has initiated development of a new **125kW** engine[115](index=115&type=chunk) - The Company expects moderately reduced losses at Nuvera in 2022 due to enhanced fuel cell shipments, excluding the impact of 2021 inventory valuation and fixed asset impairment charges[115](index=115&type=chunk) [Effects of Foreign Currency](index=31&type=section&id=EFFECTS%20OF%20FOREIGN%20CURRENCY) This section acknowledges the company's exposure to foreign currency exchange rate variability and its impact on financial results - The Company operates internationally and is subject to foreign currency exchange rate variability, with the effects on revenues, operating profit, and net income discussed in the operating results[116](index=116&type=chunk) [Forward-Looking Statements](index=31&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section highlights inherent risks and uncertainties associated with forward-looking statements, including supply chain disruptions and geopolitical factors - The report contains forward-looking statements subject to risks and uncertainties, including supply chain disruptions, cost inflation, geopolitical developments (e.g., Russia/Ukraine conflict), and customer acceptance of pricing[117](index=117&type=chunk) - Other factors that could cause actual results to differ include the COVID-19 pandemic, manufacturing delays, credit access, impairment charges, demand reduction, exchange rate fluctuations, and the successful commercialization of Nuvera's technology[117](index=117&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company's market risk exposures remain materially unchanged since December 31, 2021, consistent with disclosures in its Annual Report on Form 10-K - There have been no material changes in the Company's market risk exposures since December 31, 2021, as detailed in the Annual Report on Form 10-K[118](index=118&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting during Q1 - The Company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2022[119](index=119&type=chunk) - No changes in internal control over financial reporting occurred during Q1 2022 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[120](index=120&type=chunk) Part II. Other Information This section covers legal proceedings, risk factors, sales of equity securities, defaults, mine safety disclosures, other information, and exhibits [Item 1. Legal Proceedings](index=32&type=section&id=Item%201%20Legal%20Proceedings) The Company reported no legal proceedings for the period - No legal proceedings were reported for the period[122](index=122&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - No material changes from risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021[122](index=122&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company reported no unregistered sales of equity securities or use of proceeds for the period - No unregistered sales of equity securities or use of proceeds were reported for the period[122](index=122&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities for the period - No defaults upon senior securities were reported for the period[122](index=122&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the Company's operations - Mine Safety Disclosures are not applicable[122](index=122&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205%20Other%20Information) The Company reported no other information for the period - No other information was reported for the period[122](index=122&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206%20Exhibits) The report includes various exhibits, such as the Director Fee Policy, certifications from executive officers, and Inline XBRL documents - Exhibits filed include the Hyster-Yale Materials Handling, Inc. and Subsidiaries Director Fee Policy (Amended Effective as of January 1, 2022), certifications from Alfred M. Rankin, Jr. and Kenneth C. Schilling, and Inline XBRL documents[122](index=122&type=chunk) [Signatures](index=33&type=section&id=Signatures) The report was duly signed on May 3, 2022, by Kenneth C. Schilling, Senior Vice President and Chief Financial Officer - The report was signed by Kenneth C. Schilling, Senior Vice President and Chief Financial Officer, on May 3, 2022[126](index=126&type=chunk)