Q3 2020 Hyster-Yale Materials Handling Inc Earnings Call
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Hi.
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Thank you for standing by welcome to the High Street L. Q3, 2020 earnings Conference call. At this time all participants are in listen only mode. After the speakers presentation. There will be a question answer session to ask a question during the session we need to press star one on your tone.
Please be advised today's conference is being recorded if your cardio for their assistance. Please press star zero on how they tend to conference over to your speaker today Christina Kmetko. Thank you you may begin.
Good morning, everyone and welcome to our 2023rd quarter earnings call I am Christina Kmetko and I am responsible for Investor Relations at Hastert Yep. Thank you for joining US. This morning, joining me on today's call are al Rankin, Chairman, President and Chief Executive Officer, I pay for your materials handling or.
Facade, President and Chief Executive Officer of Criteo Group, and Ken Schilling, Our senior Vice President and Chief Financial Officer.
Yesterday evening, we issued our third quarter 2020 results and filed our 10-Q.
Copies of our earnings release, and 10-Q are available on our website.
For anyone who is not able to listen to today's entire call. An archived version of this webcast will be on our website. Later this afternoon and available for approximately 12 months.
Our remarks that follow including answers to your questions contain forward looking statements. These.
These forward looking statements are subject to risks and uncertainties.
That could cause actual results to differ materially from those expressed or implied by such forward looking statements made here. Today. These risks include among others matters that we have described in our earnings release issued last night and in our 10-Q and other filings we make with the SEC we.
We disclaim any obligation to update these forward looking statements, which may not be updated until our next quarterly earnings conference call if at all.
Also certain amounts discussed during this call may be considered non-GAAP. The non-GAAP reconciliations of these amounts are included in our earnings release and available on our website in a moment I'll discuss our third quarter results. The first let me turn the call over to our chairman and CEO al Rankin for some opening remarks out.
Thanks, Christie and good morning, everyone.
Thanks for joining us today.
The global COVID-19 pandemic continues to.
All right Alan just for.
Every aspect of our daily lives.
And our first priority continues to be keep our global workforce.
And to help reduce the spread of rone.
Spread of this virus as you all know began in January.
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Hi, James do you want to give Allison Mark sure.
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For those listening on the call are worth sorry, we're having some technical difficulties. So we're going to pivot, yes. So I'll just.
We're going to continue with alpha remarks of the.
Out of this virus you know began back in January as you all know and despite all the progress we've made since then.
The questions were getting a contract where we were contemplating month ago regarding the depth and duration of the downturn.
And the speed and shape of the recovery.
Still very much with.
Actually as we see cases rise again globally.
While there are several promising vaccine process timing availability on mass distribution capabilities remain open question.
Despite these ongoing challenges our global workforce has remained focus.
Hi, Joe.
During that period.
Effectively.
Navigating an evolving landscape to meet the needs of our customers and deliver solid third quarter financial results.
Christie will provide the financial details mix, but overall our business is still feeling the impact from the COVID-19 pandemic.
The effects of moderated from those realized in the second quarter.
The significant decline in global economic activities as a result of.
The broad measures taken globally to limit the spread of the virus.
Specifically early in the second quarter continued to affect demand for our products.
Third quarter.
As a result, our third quarter consolidated operating profit and net income was significantly lower than in the prior third quarter.
Nevertheless, as a result of higher than anticipated pace of market growth subsequent to the pandemic related global step down.
The impact of our cost reduction programs.
Third quarter 2020 results significantly exceeded our initial expectations.
And we're continuing to make important investments for the future, which [laughter] third quarter results also included a full quarter benefit associated with several.
Cost reduction measures implant.
We implemented throughout the first six months of the.
Benefits from the cockpit.
Containment actions resulted in a decrease in operating expenses of $19.4 million.
For the third quarter and $47.3 million year to date compared with the respective prior year periods.
And this pandemic related work environment, the resiliency of our workforce has been impressive and.
And we greatly appreciate their efforts to remain both safe and productive.
While keeping costs down.
Hi, steel management team and global workforce of responded confidently and successfully through a variety of challenges thoughtful.
As a result, we believe our employees and our businesses are well positioned to manage through the remainder of the pandemic.
Every loan disciplined execution in the different when the current difficult environment has enabled high field to support our dealers and customers.
At the same time work diligently to ensure the health and safety.
After Chris to review the results of the quarter I'll discuss our business operation.
And our strategic program, Ken will then talk about outlook and how we are managing our business through the.
Uncertain and evolving environment.
Let me turn the call over to Christie to cover our results for the quarter.
Thank you Larry.
I'll start with the quarter highlights and then discuss the individual segment our.
Our third quarter consolidated revenue decreased to $652.4 million down 14.8% from last year's third quarter, mainly due to lower bookings in the second quarter and the resulting lower shipments primarily caused by the pandemic related global effects and the pace of the subsequent forklift truck market.
Recovery, Arkansas.
Our consolidated operating profit also decreased significantly to 7.3 million from $19.5 million in the prior year third quarter due to lower results in all of our segments.
However, I want to point out that the 2019 third quarter results included $8.7 million of favorable retroactive tariff exclusion adjustment.
If you exclude those out of period adjustments from the prior year results. The decline in operating profit associated with the actual business operations, there's not a substantial primarily because of lower operating expenses due to the cost containment actions previously implemented.
Net income decreased to $5.1 million or 30 cents per share from $12.8 million or 76 cents per share in the prior year quarter.
I'd also like to note that the third quarter is generally our seasonally low quarter as a result of normal summer plant shutdowns and customary lower third quarter production schedules at our manufacturing plants.
Turning specifically to the lift truck business.
Your your group's third quarter revenue decreased 14.7% to $618.7 million from $725.3 million in 2019, primarily due to fewer shipments in the Americas EMEA segment.
Consolidated shipments decreased by approximately 2900 units due to fewer shipments and all the class one electric counterbalance Chuck.
The Americas, and Jay pick segments and class three warehouse trucks in AMEA and Jay Bullock.
Hi, Steve will provide more detail about our bookings and shipments in a moment.
Third quarter 2020 operating profit in the lift truck business decreased 42.1% from the prior year quarter, mainly because of a decrease in gross profit in all segments due to lower unit and parts volumes as well as the absence of the favorable retroactive tariff exclusion adjustments I previously mentioned.
In the Americas, and Jay pick segment. The decrease in gross profit was partially offset by lower operating expenses, primarily as a result of cost containment actions previously implemented.
In EMEA the decline in gross profit was more than offset by the favorable impact of the cost containment actions combined with $1.6 million of government subsidies, which combines resulted in an increase in EMEA third quarter operating profit over 2019.
As the Bolzoni segment revenues decreased 16.5% in Bolzoni reported operating profit of $100000 compared with operating profit of $700000 for the 2019 third quarter.
The decrease in revenues was due to lower sales, resulting from the decline in global economic activity.
I was going to the pandemic related shutdowns.
The decrease in operating profit was also mainly because of lower sales volumes, but the decline was partially offset by lower operating expenses due to the cost containment actions taken.
Finally at Nuvera revenues were $700000 in the third quarter of 2020 down from $2.4 million in the prior year and the various operating loss decreased modestly to $8.7 million from $9.3 million in 2019.
Revenue decrease was primarily the result of a decrease in third party fuel cell development services.
The improvement in operating results were driven by lower inventory adjustments in the 2023rd quarter compared with the prior year as well as the favorable effect of cost containment actions there.
Those are the results for the quarter now let me turn this over to Rajiv who will provide an update on our operations and our strategic program.
Thanks Christie.
As I said continue to be very proud of the hard work and disciplined execution of our global workforce as we continue to work through the challenges brought on by COVID-19 pandemic occur.
Across the company, we have focused on maintaining the safety of our employees and preventing the spread of the virus we.
We have a good track record in doing that however, the recent resurgence in cases is creating new uncertainties and added stress.
It is important.
With that as important as ever that we are diligent and Mccain strong safety procedures. Despite the pandemic could peak.
Many of us are experiencing.
Let me reiterate I'm very proud of our workforce for their ability to stay focused and effective in these uncertain times, including maintaining the protocol, we have established to keep themselves and those around them space.
Moving onto our operations as economies continue to reopen in 2020 to quarter.
As we mentioned lift truck market activity improve faster than anticipated.
With markets ending the quarter at roughly pre pandemic level.
Excluding China, which increased 78% over the prior year third quarter, the global lift truck market was down less than 1% compared with the third quarter of 2019.
Compared to second quarter of 2020, the global lift truck market increased 22.5%.
In the 2023rd quarter, driven by a 28.8%.
Percent increase in EMEA, and a 25.9% increase in America as well as a 19.7% increase in China. These.
These market improvements over the second quarter translated into a solid increase in our 2023rd quarter bookings.
During the third quarter, our unit shipments decreased from prior years.
Third quarter footwear higher than the second quarter third quarter shipments were down because of substantially lower bookings in the second quarter of 2020 due to the pandemic related shutdown and the lower production rate that we put in place to match market conditions.
While shipments were down from the prior year third quarter bookings were comparable to the 2019 third quarter, but were up substantially from the second quarter of 2020 as global demand steadily improved throughout the third quarter.
Specifically in our primary markets.
Americas and EMEA.
Bookings in each month of the third quarter continued the steady upward trend that began back in May also.
Also our September booking increase substantially over August reaching a level that exceeded the September 2019 booking.
While we continue to carefully manage our backlog and shipment so that our lead times and production rate match market conditions. During this period of uncertainty the strong third quarter booking led to a modest increase in our ending backlog over the second quarter.
Additionally, as markets and industries, where.
Our position is stronger have begun to recover we have experienced a change in the mix of products, which have resulted in a higher average price per unit in both.
Bookings and backlog for the 2023rd quarter compared with the 2022nd quarter.
As market conditions improve we expect that increased bookings and the strategic programs. We continue to pursue we're position each of our businesses to recover.
We recovered to sound long term financial.
Returns.
Now, let me spend just a few minutes talking about our strategic program.
Fight the uncertainty regarding near term economic activity, we continue to be committed to our long term strategy.
The projects required to execute our strategies continued to move forward, but in light of COVID-19 panel.
The pace of certain projects have been given greater emphasis than others, the reduced near term operating expense and capital expenditures.
While we are committed to continue while we are continuing to introduce a number of new products. During this period.
Our primary focus.
In the lift truck business is on a set of new modular scalable product family covering both internal combustion engine and electric trucks.
We have been focused on maintaining the timing of the introduction of the first of these products, which is the standard version of the two to three ton internal combustion engine lift trucks for the M&A market.
This version is expected to be launched in the third quarter of 2021 for launch of this new harvest align range of two to three ton counterbalanced drug.
We will continue throughout 2021 with trucks for the Americas market are expected to be launched in the second half of 2021.
We expect the modular nature of these new products to enhance our ability to meet customer needs.
Lower cost and with more of the application specific.
Both at the industry level and at the individual account customer level.
If this rapidly in this rapidly changing environment, we have accelerated our focus on finalizing and implementing our industry strategy and.
And our investment in industry focused sales capabilities to support our dealers.
Given the COVID-19 environment. We have also focused on enhancing our remote selling capability through technology and IP enhancements.
Calls only continues to focus on is America's growth strategies, including strengthening its stability.
America market through the supplier cylinder and various other component from it probably is in Alabama plant.
And introducing a broad range of locally produced attachment with shorter lead times the service customer base both.
Although nasal for implementing as one company three brands structural approach, which.
Which will help streamline back office operations and strengthen its Americas and JP commercial operation.
Nuvera continues to focus on serving heavy duty applications, particularly bus and truck applications within 45 kilowatt engine.
Which was released for sale during the war.
22nd quarter. It also continues to focus on lift truck Mark.
Market.
During the second quarter of 2020, Nuvera, which has successfully achieve certification audit 45 kilowatt engine protein.
For China in 2019 received its first.
Integration certification, which allows the engine to operate in boxes.
During the third quarter testing of these engines in China Chinese buses was completed for one Cup company.
That company has now included the certified by design in its sales catalogue.
Certification of other bus companies are expected late in the fourth quarter of 2020 and in the first quarter of 2021.
As a result of these milestones Nuvera has accelerated the 45 kilowatt commercialization operation for the global market and is focusing on ramping up the sale of this product in the fourth quarter of 2020 and in 2021.
Nuvera is also developing a new engine that will approach.
That will be approximately 60 kilowatt for the Chinese market.
It is expected to begin the certification process during the fourth quarter.
The engine certification for this engine is expected to be received during the 2024th quarter with vehicle integration certification expected to be completed.
In late quarter or early in the first quarter of 2021, okay.
Overall, it is our intention to emerge stronger from the pandemic and to thrive as business conditions improve.
We believe our prioritized strategic programs will put us in that position.
I'll now turn the call over to Ken for an update on our ports regarding future quarters and measures taken to enhance liquidity can.
Thanks relief while.
While recent market booking activity is encouraging and growth of the 2022nd quarter shutdowns has been better than expected the level of our future bookings is still uncertain.
The trend line for Brooklyn for bookings is improving but improvements are occurring at a deep increasing rate and the COVID-19 cases are increasing.
Overall, we continue to operate on the assumption that the economic and market environment will remain difficult throughout the remainder of 2020 with coated 90 case is expected to increase in areas entering the winter season.
And in 2021 as well until an effective posted 19 vaccination for alternative therapy as widely available.
While we may not be able to control the macroeconomic factors that drive the demand for our products. We are aggressively executing on actions that are within our control to keep our employees healthy as COVID-19 cases once again spike in many of the countries around the globe and on moderating any resulting additional near term financial and.
Pack from the continuing coupled with 19 pandemic.
Beginning late in the first quarter, we put in plans, we put in place plans to mitigate the impact of declining markets and bookings and the consequential impact of reduced manufacturing activity from pandemic related shutdowns by initiating cost reduction measures, which were designed to lower cost.
And enhance liquidity.
Despite currently improving markets. We expect these measures to remain in place until the market and economic uncertainties dissipates and results improved.
Which we anticipate will incur over the course of 2021 we.
We expect these cost reduction actions to achieve $60 million to $75 million and operating expense savings in 2020, compared to 2019 of which approximately $47 million have been realized through the end of the third quarter.
As Rajiv as mentioned, we also adjusted production levels at our manufacturing plants during the 2022nd quarter to align them more closely with the anticipated reduced demand and targeted booking level.
Throughout the third quarter, we increased production moderately to adjust or improve market levels and we anticipate increasing production further in the fourth quarter given the excess.
Expected bookings and backlog barring of course, any new government shutdown.
Based on our current backlog levels and plant production levels, we expect to have adequate component supply and minimal open production slots over the remainder of the year.
This is expected to position us with both competitive lead times and acceptable ongoing backlog.
We will continue to focus on adjusting production levels quickly to match the market in booking changes and work and working on clothes and working closely with our suppliers to ensure appropriate component supply as our production levels change here.
Given these factors, we expect our fourth quarter 2020 operating profit net income to be significantly higher than both 2023rd quarter and the prior year fourth quarter.
Let me take a step back and explain that ARX expectations for the 2024th quarter were established prior to the most recent spikes of over 90 cases as seen in a number of countries, including our largest markets.
This environment could develop into a headwind for our current fourth quarter booking expectations further we or some of our suppliers mainly the shutdown.
Renewed measures have already been taken a number of European countries, the mitigates spread a virus and similar actions are likely be taken by other countries.
At this time, the new measures put in place have not had a significant impact on our plans for suppliers. However, we are monitoring the evolving situation, including monitoring closely a number of suppliers based in areas where cases are spiking.
We are prepared to take further actions if necessary to maintain the health and safety of our global employees and to address any production and supply chain issues, which may develop more.
More broadly as a result.
Pandemic related uncertainties continue to limit our ability to forecast booking levels for 2021.
In addition to our focus on cost containment actions. We've also focused on actions to enhance our cash flow before financing, including reducing our working capital and reducing or deferring capital expenditures.
Which we now expect capital expenditures to be approximately $61 million for the full year 2020.
Our 2023rd quarter cash flow before financing improved significantly over the second quarter and over the prior year third quarter, helping to generate $46.3 million of cash flow before financing for the nine months ended September Thirtyth 2020.
Enhancing our liquidity potential also continues to be a priority at September Thirtyth 2020, our cash on hand was $89.9 million in debt was at $297.7 million.
Compared to cash on hand of $60.5 million and data $337.7 million at the end of the second quarter Encouragingly, our net debt improved $69.4 million to $207.8 million from $277.2 million at the end of the second quarter.
In addition.
As of September Thirtyth, we have unused borrowing capacity of approximately $260 million under our existing revolving credit facilities compared with $218 million at the end of the second quarter.
Looking to the future in the context of an improving booking trends, we plan to increase our investment in working capital to support the forecasted growth growth in our business.
Our if you're if you use your line is now.
Secure can you off I'll return the call back to you.
Thanks, Ken before I turn the call over for questions.
Let me say that helps your yield is very strong.
And we have an outstanding group of leaders and employees you have effectively manage production and supply chain disruptions and kept ties to Yale on a positive path.
In the period since the pandemic began.
We can't let up as the pandemic is still with us, but I'm reassured by the strength and resilience of our people and believe we will deliver solid sales and earnings performance over the long term.
Now let me open up the call for any questions that you may have.
Thank you at this time I would like to remind everyone in order to ask a question. Please press Star then one of your telephone keypad again Thats star one to ask a question the apostrophe snowed reconcile the killing Austria.
Again, if you like to answer questions. Please press star one our first question comes from Ron Sri Associates. Your line is open.
Yes.
Hello audio shrieks your line is open.
That.
We can hear you if you're asking questions I'm sorry.
Your next question comes from Michael Sasso with DWR secure one is okay.
Hi, Thanks can you guys comment on significant.
But.
Okay completing.
Of the.
Putting the certification.
For that 45 kilowatt engine.
Thank you.
In your remark about.
Rajiv you want to take that.
Yes sure so.
To apply these engines in China, you have to go through our two types of certification one is that the engine level and the other one is at the vehicle level.
The engine level certification this call SMB I see.
And once that's approved then you can start working with.
Vehicle integrators to integrate those engines and certify the whole vehicle, where the fuel cell system Endevco M. MIT.
Certification.
So as we stated we have done that.
45 kilowatt engine and one OEM in China, which is now available for orders now what's also happening in China is.
You know, there's some changes to the subsidy.
Subsidy regulation.
So as a large number of customers are waiting for the fat to stabilize.
What it may require is a higher power engine and Thats part of the reason why we are developing.
60 kilowatt engine, which is going into the third.
The certification process right now going through it right now.
So.
And that we feel that the 45 kilowatt is the right solution for these.
In a kind of medium size buses, though in eight to 10 11 meter buses.
So we will continue to market that elsewhere, we are talking to other customers in Asia and Europe about that and then.
And then we are starting to talk.
About the 60 kilowatt engines with our customers in China.
Thanks.
So.
The way it based on the way things have evolved over the last year or so you guys get the analyst day, how does your long term outlook for new bear exchange store or has it not changed at all.
Okay.
Our outlook for Nevada is is is very good we feel we're at the you know kind of.
Right point.
For acceleration.
If you are seeing.
In the marketplace there is.
Hydrogen fuel cells, starting to be talked about as the primary replacement for internal combustion engines, particularly in the short to medium term for heavy duty vehicle, which our buses and trucks.
And some of the larger vehicle platform.
And we are having discussions with a large number of Oems about these.
The solution.
So we feel good about where we are.
And I think we are in as the market turns up we think we're well positioned to participate in.
In the primaries in some key platforms will integrate fuel cells.
Well given that I think I'd, just add to that that the real significance.
Passing those.
Certification, Josh is that our commercialization programs can you go into.
Hi gear.
The most immediate markets.
Volume appear to be in China, but other markets are emerging.
In segments in both the Americas, North America and in Europe, but the.
At do bear the focus is beginning to shift from ensuring that we have the right engine.
And the right engine variances added dairy instead as you 60 kilowatt engine too.
Our commercialization and really beginning to drive.
Revenue.
Over the next.
A couple of years. So we're we're moving into quite a different phase should do better as a result of catching those shows.
Certifications.
All right, great and so what should we be looking at investors. What's it look what milestones should we be looking for.
To to track the progress with the commercialization and the revenue ramp.
Well, we'll be reporting.
In our regular quarterly.
Moving on.
The the level of.
Orders and.
The kind of shipments that we think we may be seeing that will be very careful how we do that to make sure that.
The timing of those is.
Fully agreed upon by not only option our customers, but by the end users of the product.
Show.
That that's what you want to be watching for but we're not going to forecast way in advance.
We're going to him.
Let.
The process work through.
Get the orders and then make the ship.
Okay, and just maybe to two final follow up question do you given where you are now with the focus is shifting to commercialization bottom are you are you thinking about strategic partnership store or peiser Yale the back end.
To to pursue the commercialization.
But we're always thinking about alternatives to move.
Moved forward in the best possible way.
We wouldnt comment on those in advance except two.
I'll point out that.
There are many segments in the tone.
Total addressable market.
And that.
Some sort of alliances would probably be necessary.
Including.
Shales.
[noise] arrangements.
Dedicated sales arrangements with potential customers in different segments as we move forward show, it's going to be an orderly process of figuring out the best way.
To sort through.
Adam.
The most attractive segments of the market.
And how best to participate in them.
Rajiv you have anything to add to that I think that probably lays out the approach. We're taking yes, I think that that's a good summary.
Okay, just a final final follow up.
Given the increased attention to hydrogen fuel cells as the technology do you have any thoughts on where new veritex within the competitive landscape.
Yeah, maybe I can take this one hour. So if you think about the fuel cell less some critical attributes that you need to have.
And we feel good about the attributes that Nevada have for instance, one of the critical one is power density.
Both from how much power our unit weight of fuel cell can generate and also the unit volume.
As you can imagine both great and volumes are very critical for Oems and we feel we are leading in that area because of our openflow field architecture. The other areas robustness.
You know as you know as our kind of basic structure of the fuel cell is based on stainless steel where number of our competitors are using.
Different types of substrates, such as graphite, which we feel is less appropriate for motive power.
The last area is our working within the Nuvera and high Steel group, we've applied in a fuel cells to.
Forklift trucks.
And in that process, we have learned a significant amount about how.
To manage the fuel cell as it transitions into an engine and have significantly increased the robustness of the solution.
So I think those three parameters we feel were in.
In either leading are amongst the leaders in that in those parameters, which are critical to both OEM and system integrators.
Now, let me just add to that that John.
The backdrop for everything that John.
Rajiv just outlined.
It is a very significant.
Our patent position.
In a.
Fuel cell solution.
Which is different from many from our competitors.
And we think that gives us a very good position for long term success.
Especially in the heavier duty.
Motive applications at various times, but also in other segments of the market.
Great. Thank you for answering all my questions.
Your next question comes from Mike Shlisky of Colyer Securities. Your line is open.
Hey, guys. Good morning, and say great job on the opening comments that the true definition of teamwork has assisted.
Hi, CEO for quite a long time now great work on that.
I will ask questions I'm not sure I want to follow up with a few questions on my own on our new Vera.
I guess first of all.
Just a bit more on the.
Our opportunity in the less for some of the lift some of the.
On how applications.
If you will so our systems.
I guess do you have to get a taking time certification things. Your engines that you wanted to have them on US Highway. That's my that's my first question.
Yes, I'll take this one as Rajiv.
Again certification by region so in.
Kind of.
A set of requirements to drive integration into commercial trucks in North America, a different set of requirements are driven by Europe and in Japan, Japan has its own set of requirement and you do need to satisfy the inner there is a lot of consistency in certification, but they are there.
They are a little different for each for each market.
Okay, and then I would love to hear your comments on the fuel so fueling infrastructure.
Across the U.S.
Yes, we feel good but are there any major companies out there that are developing the kind of infrastructure that you would need to.
You are.
A fuel cell chug, along a long distance moot or are you starting mostly adapters or are they on highway equipment to be return to base operations with the with the room on infrastructure.
So maybe I'll take that first and then Im sure I will have some comments.
From my point of view with the way we should look at hydrogen is the number of stages. Firstly hydrogen is widely is an abundant material.
And it's in a large number of energy and water.
In in a carbon field.
So in availability of hydrogen is not an issue.
Dissociation of hydrogen from a molecule to an atom is also pretty straightforward DNA electrolyzers or you something like.
In a reforming methodologies to separate out the hydrogen.
So thats well understood so.
So making hydrogen and is not an issue that the third area is around the distribution of hydrogen again hydrogen distribution could be very analogous to carbon.
Carbon fill to the gasoline you could use the same type of stations.
The distributor so I think there's nothing in the physics, the chemistry or the economics of hydrogen that that's a barrier is case of demand driving it.
Now we do feel it feels the biggest application of if we take North America. As an example, the biggest implementation of fuel cells in North America has been on a forklift.
Forklift trucks, because you can have local feeling.
We expect that to trend out so we expect.
Hydrogen as I've talked about it's been around buses, which come back to us.
Sent some sort of central fueling source in a delivery trucks vans, which come back to a central source, but we think in the short to medium term. It is going to be more in vehicles that do have a some sort of refueling.
Center to come back to like a depo, but.
But over time, there's a huge amount of work going on.
With the.
Various groups in each of the regions to create a.
A hydrogen infrastructure.
And as I said, the barriers to that on big.
Big is Jeff what will drive it is the the the need of it.
Yes, the only thing I'd add to that is that.
Once hydrogen is produced.
It's relatively straight forward to put it under pressure and shipment.
So in that sense, it's analogous to.
Gasoline and has received a suggested there are going to be these.
Specialized depo Gen manufacturing plants should have their own.
Refueling systems and those ships, maybe the hubs for.
Further expansion.
Of reviewing ucas hydrogen becomes more.
Adopted so there's a lot of flexibility I don't think there's going to be any one.
Solution.
But.
There are no real technical challenges, it's going to be a very practical matter getting it transported to the end user and the most efficient way possible as the volumes increase and as the volumes increase.
They are going to be more outlets of different time show, it's going to be very much an evolutionary process.
Okay, that's great color. Thanks, so much.
Thank you so much for that now.
I wanted to also turn just on Ken's comments at the end.
You mentioned you just want attraction can your suppliers during the pandemic of some new market shutdown can you any comments on how how your order stared during October.
And then how the owners they're doing any particular in in a particular regions or areas that actually have shutdown.
Seen any kind of shut down in activity over the last couple of weeks here.
Rajiv you want to comment on that sure. Thanks.
Thanks for the question so the what we have seen a continued.
In a market as we have made in our comments. Some of that has continued into October but we have started to see.
Some impact, particularly in Europe.
Were in as you know some of the Lockdowns have recently taken.
Second.
Significant impact and what we are saying is not that our pipeline is deteriorating, but what's happening is that our customers are taking longer to make decisions.
So thats pushing out some of the the orders that were in our plans.
But you know to certain extent, we did anticipate this when we saw the initial.
Arise.
In Europe, we are in a good position we had a in as you can see from the backlog we have a good good backlog in Europe. So we feel that we can we can go through that.
In good shape North America continues to be strong.
And then China is as we have said that China is very very strong.
And it's driven by some of them you know.
Economic.
Drivers that the government is driving.
As well as some of our competitors are being very aggressive in China.
Which is increasing the amount of volume in China Asia is a little split some costs Asia doing very well other parser essentially shutdown so.
It's a mixed story.
Okay I understand.
One other backdrop to the answer to that question.
I didnt in the first.
Rounded COVID-19.
Disease was obviously not well understood.
There were lots of questions.
And.
As a result.
The concept of a lockdown tended to embrace.
Almost all elements should the economy relatively few were left open.
I think what we found is that.
Factories warehouses.
Physical operations.
Can adjust to covert conditions.
They can have reasonable social syncing.
Very good health protection measures.
Testing.
Stricter oversight and rules Thats, certainly what were doing in all of our plants.
But the broader resolved is that as we look at it.
In the second round.
We don't think the focus of the lockdown of activities is going to be on manufacturing the way. It was in the first round.
So that gives us real encouragement that any.
Slowdowns that we see are really of the type that.
Rajiv mentioned delay each.
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And communication process efficiently.
And sign offs and things of that nature.
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But that the need is there.
And at the factories continue to work is we think is most likely.
That the opportunity is going to be increasingly there over the next year.
The year.
Okay, that's great color as well.
I also ask about your parts and service business.
These two cents in the quarter that.
You are seeing enough parts business coming in to encourage the machines are being used in the field adequately or appropriately and enough.
Or do you think you've got some more to go you think on parts and service in the fourth quarter.
Thanks.
And maybe I can take that run out and then you could make some comments for Capex, we think that we're continuing to see good part part.
Requirements in the marketplace.
There is another way we can at least in North America, we can have a good sense for what.
The demand is for our lift trucks in terms of the usage because we have telemeter young around 50000 unit.
In North America pretty much in every industry and again, we've seen we did see a drop in daily usage on.
On forklift trucks in when we were in April and May but then since then we've seen a steady improvement and now weve since around August September with Flatlined everyday to what we would consider to be mature product.
Productivity for these customers, so I think thats, where we find ourselves.
Again in Europe.
As Al said there is the lot down is much more.
Associated with.
In our home and and rather than work and we are continuing to see good demand in Europe as well.
Okay, and then just one last one in here I think you.
Are you changing your comments Rajiv about.
Introducing some of the modular products over the next year or so.
Nothing coming for a while now well see it it's on the working can you can you clarify maybe two things one.
Has that project been pulled forward. Thanks culinary team, we had will tend to focus on it I wasn't sure. If your comments meant that you are going to be able to as fast or better in the plan and then and then perhaps secondly.
Are any competitors already offering products going into the house is modular capabilities and are there any changes that you've seen in performance with these products.
Much of the old versions and any changes to how you know you fixing or how you service them.
Yeah.
Thats, a big question and.
One question on the West Coast have cobot impacted the.
The development I think I think marginally we've had our development center operating throughout.
The the pandemic enough.
Large number of our engineers are working from home, which is allowed our testing centers to be reconfigured. So that people can socially distance and complete that test.
And as normal development issues come along.
They have resolved it.
We do have a ramp.
Introduction planned for the platform and so it will progressively introduce new versions are.
The start of it both.
In terms of models, but also in terms of geography.