Q1 2021 Hyster-Yale Materials Handling Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the Heister Yale Q1, 2021 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on there.
Telephone please be advised that today's conference is being reported I would now like to hand, the conference over to your speaker today Ms. Christina <unk> co. Please go ahead.
Thank you good morning, everyone and welcome to our 2021.
Our net.
I am from Phoenix to Mexico, and I'm responsible for Investor Day license a high per yeah. Thank you for joining US. This morning, joining me on today's call are al Rankin, Chairman and Chief Executive Officer.
He per thought has been a price via materials handling and Ken Schilling, Our senior Vice President and Chief Financial Officer Jesper.
Yesterday evening, we published our first quarter 2000 has anyone results and filed our 10-Q.
This information is available on our website if anyone 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 An archived version of this webcast will be on our website.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 statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed on the forward looking statements made here today. These.
These risks include among others matters that we have described in our earnings release issued last night and in our 10.
<unk> and other filings with the SEC.
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.
In a moment I will discuss our current quarter's results, but first let me turn the call over to our chairman and CEO al Rankin for some opening remarks.
Thanks, Chris and good morning, everyone.
<unk> for our first quarter 2021, or two or next on the.
On one hand bookings were extraordinarily strong.
The forklift truck backlog at record levels.
And as a result prospects from future Brian on.
The other hand supply chain disruptions had a major impact on production and material costs, which significantly reduced our first quarter earnings.
In the fourth quarter of 2020, Hyster, Yale, we're seeing improving market demand, increasing bookings and was optimistic about 2021 prospect.
And the market demand and the bookings improvements we saw on the fourth quarter actually increased during the 2021 first quarter generating demand for forklift truck products. It was significantly higher EBITDA forecast it.
While this demand has provided us with a record backlog hyster Yale's global supply chain, which has also had to ramp up production.
Struggled to ramp up its suppliers and capacity and their capacity.
This slow on erratic ramp ramp up exacerbated by continuing pandemic related supplier labor shortages from cost increases and logistics constraints has led to significant component shortages and material and freight cost inflation.
This has had a significant effect on <unk> in the first quarter.
As a result of these factors our first quarter shipments were substantially lower than we had expected, particularly in our Americas Division, we're receiving components needed to build certain trucks on schedule was very challenging.
This resulted in earnings that were significantly lower than both the 2024th quarter and the first quarter.
While these results were not what we had planned or expected. Our team is working diligently to obtain the components, we need given our very high backlog.
Opportunity for increased production as high as supply chain bottlenecks are resolved.
After Christy reduced financial results from.
From the quarter in more detail Rajiv will provide more detail on the supply chain challenges as well as provide an update on our business operations and strategic projects. Ken will then discuss our outlook in this evolving environment Christy.
Thank you al.
I'll start with the quarter highlights and then discuss we ended the day segment.
Lengthened our unit bookings in the first quarter increased significantly.
Eight point.
8% over the fourth quarter of 2020, we ended the quarter with historically high backlog.
700 units.
Our EMEA and Jason.
Significant increases in unit shipments.
The first quarter 2020, with these higher shipments from more than offset by a substantial decrease planet fitness in the Americas adjusted.
Thank you.
On component shortages.
And the broad and rapidly increased demand as the economy recover.
<unk> will provide more detail about our bookings in fitness and I'm on.
Lower shipments in the Americas, where the primary driver for the six 8% decline in the 2023rd quarter consolidated revenues.
$732 2 million from $785 7 million in the first quarter of 2020.
Lower unit revenues were partly offset by favorable currency movements.
And our on hand, and David with cash statement and at fault zone.
As a result of the lower unit volume along with the resulting increase in manufacturing variances and higher materials inflation and freight costs, primarily in the lift truck business and Bonnie.
Consolidated operating profit decreased to $3 1 million.
From $22 million on the prior year first quarter.
The decrease was partially offset by lower operating expenses. Despite the add back of 9 million net of incentive compensation that was suspended in 2020.
Our consolidated net income decreased $5 6 million.
Or is it 33 cents per share from <unk>.
$15 3 million from 91 cents per share.
The operating profit declines moderated by $4 $6 million gain on sale of nefarious investments in preferred shares of <unk> as well as gains from favorable changes to market value of other equity index.
In our lift truck business, our first quarter operating profit decreased <unk> 2 million from $28 million in the prior year quarter, mainly as a result of the specific factors I noted in the discussion of on a component of our consolidated results.
<unk> revenues for the first quarter of 2021 decreased nine 6% and operating profit decreased to $800000 from $2 7 million in the prior year first quarter. The decrease in operating profit was primarily attributable to an increase in operating expenses because of the reinstatement of pre pandemic employee compensation.
And the decrease in gross profit the.
The decline in gross profit was the result of lower sales volume increased cost due to materially on freight cost inflation and higher manufacturing costs, resulting from inefficiencies caused by the lower sales volume.
Finally at Nomura revenue decreased in the first quarter of 2021, and the operating loss increased modestly to $9 8 million from.
From $9 4 million in 2022.
Higher operating loss was primarily attributable to a loss of manufacturing absorption price.
By reduced sales, partly offset by lower operating expenses due to the favorable effect of ongoing cost containment actions.
That completes the update for the quarter low now let me turn this over to Rajeev, who will provide an overview on our operations and our strategic projects.
Rajiv you may be on mute.
Thank you Christine.
Yeah.
Let me first start by saying that global team, that's performed very well in this challenging quarter.
Sales to them have effectively executed our strategy by generating significant booking and the strong market and increasing our market share.
On supply chain on manufacturing groups.
Diligently to address the challenges related to supply constrained on logistics challenges.
Logistic issues in the quarter.
As al mentioned lift truck market.
Activities.
Quarter lift truck market grew significantly faster than anticipated during the 2021 per quarter with market.
In the quarter substantially higher than pre pandemic levels excluding.
Excluding China, where the market increased more than 130% over the 2023rd quarter. When China was most affected by pandemic related shutdowns the global lift truck market Inc.
46% compared with the first quarter on 2020.
Compared to 2024th quarter, the global lift truck market, including China increased 20% driven by a 24% increase in EMEA.
Jeff on day, 24% increase in the Americas, and almost from 18% increase in China.
Significantly accelerated global demand over the 2024th quarter and our share gain program translated into a substantial increase.
First quarter bookings with market share improvement.
Americas, EMEA, and Asia, and India market and resulted in record backlog.
Despite the substantial increase in bookings our unit shipments were only moderately higher than the 2024th quarter on were lower than the 2023rd quarter.
Shipment increased over the fourth quarter because of substantially higher bookings in the third and fourth quarter of 2020, however shipments were lower than a year ago because of the low production rates that we put in place to match.
Component availability on backlog.
Since the shutdown in 2020, we have prudently increased production level per their manufacturing plants to align them closely on.
Dissipated levels with demand.
The booking level on component availability.
<unk> approach to increasing production rate.
To meet the accelerating market demand focused on building backlog of FERC to ensure a stable base for future production.
However component shortages logistics challenges on supply constraints.
Net reduced shipments compared to last year's first quarter.
We expect market growth in the remainder of the year to moderate from the first with the highest growth rate.
Last quarter.
No.
Market levels bookings on share with very high from April.
We also anticipate the profitability of the slowdown on bookings in the second quarter as we implement price increases to mitigate the impact of materials and freight.
Cost inflation.
Nevertheless, we continue to expect increased bookings for the 2021 full year compared with the low levels in 2020 as a result of fan.
Dissipated continued market growth and the strategic projects, we continue to pursue at each of our businesses to enhance market share.
These strategic projects.
Gained traction in the third quarter on.
The definitive timeframe for achieving full share gain results are still uncertain due to timing and full impact of strategic projects and the continued.
Financial impact of debt.
The economic recovery on supply chain and cost.
Kevin.
Now, let me spend a few minutes discussing our strategic projects despite the potential volatility.
Near term economic activity, we continued to execute our long term strategy by advancing our key strategic initiatives, while essentially all of the projects required to execute on our initiatives continues to move forward in the context of COVID-19 pandemic the pace of certain projects that had been given greater emphasis.
Than others.
Some accelerated projects have experienced delays as a result of the impact of the pandemic.
We continue to introduce introduce new products per DAU.
Our primary focus in the lift truck businesses on a new set of modular and scalable product family for both internal combustion engine on the electric truck.
We launched the first of these new modular products.
The standard version of the two to three ton internal combustion engine lift truck for the EMEA market in mid April.
The new EMEA trucks have been very well received on the launch of this new range of two to three ton counterbalance trucks from the other market is expected to continue throughout 2021 and the early part of 2022.
We expect the expect the modular structure of these new <unk>.
<unk> to enhance our ability to meet customer needs.
At the lowest possible cost.
And in a way that is more specific to their application.
On the industry level.
The individual customer level.
The rapidly changing environment, we have accelerated our efforts to finalize on implement.
Industry strength reduce and our investment in industry focused sales capabilities to support our dealers.
Given the COVID-19 environment. We are also focused on enhancing our remote setting capability through technology of 19 pumps per month, which.
Which we very successfully on our launch of the new module the Trump.
<unk> continues to focus on implementing its one company rebrand organizational approach to help streamline corporate operations and strengthen North America and JP commercial operations.
She's also focused on increasing it.
<unk> business and strengthening its ability to serve industry in the north American market by introducing a broad range of locally produced attachment with shorter lead time and through continuing to flow.
Cylinder various other components produced solid Alabama.
Newburg with focus on serving heavy duty applications, particularly bus and truck applications.
Was it 45 kilowatt from 60 kilowatt engine.
Which were both released fulfill during 2020.
As a result of these milestones Nomura has accelerated that 45 on 60 kilowatt and being commercialization operations for the global market.
Focusing on ramping up demonstration.
And bookings for these products in 2021 with from booking expected in 2021.
Overall, we believe the company will emerge stronger from this pandemic on.
On that our strategic projects, we have reinforced that position on.
<unk> turned the corner, which accounts for an update on future quarters on liquidity.
Ken.
Thanks Rajiv.
While the recent market and booking activities are strong and growth has been better than expected the pace of increasing shipments remains uncertain.
Overall, we continue to operate on the assumption that economic and market.
<unk> will remain difficult in 2021 until supply chain issues are fully resolved and COVID-19 vaccinations are fully implemented.
Early in 2020, we put in plan, we put plans in place to mitigate the impact of declining markets in bookings from the consequential impact of reduced manufacturing activity from pandemic related shutdowns initiated cost reduction measures. These measures included spending and travel restrictions.
Significant reductions and temporary personnel furloughs salary reductions and suspension of other benefits, including incentive compensation.
Effective January one 2021.
Reinstated pre pandemic salaries benefits and incentive compensation programs.
Other cost containment actions are continuing and are expected to remain in place until market and economic uncertainty dissipates and our results further improve which we expect will occur over the course of 2021.
In the 2024th quarter, we did restructure some of our operations to reduce our long term cost structure. We anticipate we will incur charges of approximately $1 1 million during.
During the remainder of 2021 for additional costs related to this restructuring.
Estimated benefits from this restructuring program are expected to be approximately $10 $4 million annually beginning in 2022.
As Rajeev as mentioned, we adjusted production levels at our manufacturing plants during 2020 to align them more closely with market demand and targeted bookings.
<unk> been building backlog levels up modestly moderately during the second half of per year.
However, given the strong bookings in the fourth quarter and first quarter and the backlog levels at historical highs.
Higher build rates at first appeared reasonable for 2021.
However, as a result of continued supply chain and logistics constraints, we were not able to achieve the production levels. Originally planned for the 2021 first quarter.
These production headwinds are expected to continue to present significant challenges for production in the second and third quarters. Although we were hopeful that these challenges will abate and production levels will be able to be increased above our previously planned rates in the second half of the year.
We also expect significant material cost inflation and higher freight costs to continue into the second and third quarters and the non renewal of tariff exclusions are expected to affect the cost of components in the second half of 2021.
We have announced and implemented price increases to moderate the effect of material cost inflation, but many of the orders in our backlog do not reflect these price increases.
As a result, we expect to experience margin pressure throughout 2021 due to the lag between when price increases went into effect and when they are fully realized since customer orders in the backlog are generally price protected.
We will continue to work closely with our suppliers to accelerate in the Piceance components supply levels in order to facilitate increased production levels.
We anticipate that commodity costs will continue to increase as the year progresses.
We'll continue to monitor potential future supply cost and tariffs closely and adjust pricing accordingly.
Despite these factors, we expect our second quarter operating profit and net income to be significantly higher than the very low second quarter 2020, and first quarter of 2021 results since supply chain constraints are anticipated to moderate only modestly.
Operating profit is expected to increase because of an expected increase in unit shipments and an anticipated favorable currency impact based on current currency rates.
Partially offset by material and freight cost inflation as well as the reinstatement of incentive compensation and full salaries and benefits.
Let me take a step back and explain our expectations for 2021 second quarter based upon the most recent information we have available for this past quarter and this quarter in particular have shown the effect on the lift truck market.
From the anticipated economic recovery from the pandemic can change our expectations rapidly we.
We are moving to the COVID-19, we are monitoring the COVID-19 hotspots, including.
Including closely monitoring a number of our suppliers based on areas, where COVID-19 cases are high.
We are prepared to take further actions if necessary to maintain the health and safety of our global workforce and to address the production and supply chain issues, which may develop sales. The result, the uncertainties of the supply chain recovery timing continues to limit our ability to forecast bookings and shipment levels for the.
Our remaining 2021 quarters.
Looking to the future in the context of an improving booking trends we.
We expect to increase our investment in working capital and other expenditures to support growth in our business capital expenditures are expected to be approximately $68 million in 2021.
While we expect to make these substantial additional investments in our business. This year maintaining liquidity also continues to be a priority at March 31, our cash on hand from one one.
Third $3 million and our debt was $285 $4 million compared with cash on hand of $151 $4 million and debt of $289 2 million at December 31.
In addition, as of March 31, we had unused borrowing capacity of approximately 265 $3 million on.
Under our existing revolving credit facilities compared with $266 4 million at the end of the year.
I'll now turn the call back to al.
And I believe the value on mute.
I will conclude by noting that our strategy for the longer term, it's clearer than transformative.
Our key projects as well as the explicit objectives with the highest yield group fault zone, each new Vera businesses support this long term strategy.
But near term prospects are on certain Petro resolved a number of abnormal.
Largely external influences as we've discussed specifically the direct impact of the COVID-19 pandemic on some markets suppliers manufacturing levels around the world and logistics issues, which collectively create.
Supply cost challenges as well as the adoption reach for key fuel cell market segments.
End markets are strong.
Record a record with truck backlog a strong current booking environment. We are working diligently to manage the supply chain headwinds, we are continuing to invest in innovative products to meet increased customer demand.
As a result, we believe future increased shipment opportunities are very significant.
However, it is difficult for us to forecast when these increases will occur given the supply and logistics difficulties.
Nevertheless, when these challenges from mitigated we believe we will deliver solid sales and earnings performance and that our long term strategies and prospects.
Very significant impact.
We look forward.
Before I open up the call for questions I would like to note that we will be holding a virtual investor day. Later this month on May 25.
From release will be issued shortly with registration link for that event.
We encourage you to join us as Rajiv, Ken and I, along with other members of our senior management team provide further information on our strategic roadmap to deliver long term shareholder value.
I will now turn to any questions you may have.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster.
Yes.
And your first question is from the line of Steve Byrne Zhang. Please go ahead.
Hey, good morning, everyone and thank you.
Cover four topics to cover this morning.
A great job of sort of giving.
Giving an overview on it certainly seems where issues you talked about we are coming up this quarter.
<unk> reported last quarter.
But I'm curious if things get a lot tougher in March and into April did you see the supply chain constraints.
Become more challenging as Q1 went on.
Rajiv do you want to take that.
Sure. Thanks, Phil.
I think thats it.
Up situations progressed through the quarter.
And on.
<unk> looked at and what we plan to build growth that will be felt I think we had impact clearly took off a quarter. It didn't accelerate in any way in fact, if anything the visibility to our supply chain from.
As we sit here as debt.
The best level over that time that we still have a significant number of challenges.
So I believe in our kind of February March were.
The tougher months.
April is up a little bit and I think we're.
We still have challenges as you can imagine in India eastern.
Eastern Europe its trough.
From a supply chain point of view, but.
But we're reflecting those issues.
Rajiv.
Could you just.
Alright.
A little bit about the process, we're using to track components.
To try to break through these bottlenecks and give people put investors a flavor for it.
For the process that we're introducing.
Sure. Thanks.
So what we are using as a kind of a war room type environment. The virtual war room, where we've got every component and every supplier.
We have supply chain team tracking each one with getting commitments from suppliers from if they can hit our <unk>.
Projected demand.
And wherever we had confirmed we are actively working with them.
Good day from what's already been in the news we had issues around on microprocessors.
Issues around resin, but then there was some kind of a general confirms and we use a lot of that in archrock, but on.
Also we have consensus.
<unk> suppliers and individually worked through them one at a time.
To give you a sense for it in February public chasing around 7000.
Key issues, which improved in March to may be low.
Two to 3000 and now we are chasing kind of hundreds of issues. So hopefully that gives you a sense that.
Visibility that's had the supply chain is recovering.
But we have some very specific issues.
The largest of which for US India right now.
I might add to that at the same time, we're beginning the process of working with all of our suppliers to help them break bottlenecks help them increase their own capacity as we look forward because as we noted a number of times we have a.
Our record backlog, we want to serve our customers.
So effectively.
As we can.
So getting an increase in our <unk>.
Capacity of our suppliers is a priority.
And.
On the sort of middle term.
On the last half of the year.
In particular, the immediate near term focus is.
Okay.
Component by component process.
Steve just described.
Okay.
Is it different for them and I note that fault zone has a pretty nice sequential improvement or are they not face channel.
Less complex equipment.
Faced with not the same challenges where such states mortgage book they were coming off on <unk>. So let me just give you an overview that again.
As the case.
On a four <unk> group.
We were hoping for better results in the first quarter debt.
Actually achieved so far.
Absent the concerns that effect.
Supply and particularly material cost increase.
We think we would have done much better in volatile and I think thats the best way to answer to your question.
That's helpful.
When we think about on you mentioned from massive backlog.
How sticky is that backlog because on the it looks like you're certainly at minimum two quarters. So if revenue without taking any additional bookings. So you start pushing some of this out.
How confident are you that you've got backlog holes.
Okay.
Go ahead.
Sure.
I think.
We've definitely put our lead times, our customer from the span the lead times that we're working with I think we have reinforced path.
We have the same simple to have the border.
Mainly due to the inflation that our customers athene.
So.
I expect that the majority the vast majority of the backlog we have.
It is very sticky and.
And in fact customers are constantly making those decisions knowing our backlog growth knowing on big time on open knowing the challenges.
Better than the market.
But saving as well, especially the industrial side of the market. Yes, Let me just emphasize that first of all the backlog is not all immediately shippable.
Some of those orders.
Our fourth day.
Extend out for the full year and in many cases so.
On the are there.
They are spread out over a period of time, that's one point the other yes.
If we were the only supplier in the industry that had these bottlenecks and to have the inability to make.
It makes the shipments.
We might be under quite a bit more competitive pressure.
And substitution pressured than debt. We are I think it's important to keep in mind that the factors worth discussing.
Effect.
Other competitors of ours.
Also and even more generally.
Industry as a whole.
Significantly affected by supply chain issues, I mean, you read pretty much every day.
Now about.
What.
Chip problems that are.
Affecting the industry the automotive industry are causing.
On.
Production shortfalls.
In the automotive industry, so, especially on a fairly broad based set of circumstances that are going on in the economy, we'd look at it.
And then you mentioned.
Potential for some price increases.
Whats your sense on customer feedback early customer feedback to that and how much you're going to be able to I think offset potential.
Let's go to materials price can you pass all the materials price cost increases through or are you trying to get a partial pass through.
Well I would really focus on niche on Ken's comment Jim.
Ultimately, we expect to have a full pass through we target margins. We think they are reasonable we think there are competitive.
The issue here is debt.
We have.
Backlog.
Which in general as Ken pointed out has.
Locked in prices and material costs are going on in a way that we can't really.
Capture through price increases, we try to work with our suppliers to moderate cost of.
Our price increases but debt.
Just to take an example.
Now very long ago and in general over time.
Oil prices have been somewhere around what rajiv through 450 or $500 a ton or actually.
On the spot market right now there are $500, that's never happened before to my knowledge.
So these are pressures that I think everybody is feeling and I think theres going to be considerable ripple of inflationary cost pressures in the economy now eventually those.
The bottleneck share kind of get broken.
And.
But there is a real surge in demand.
As a result of.
Our government programs.
Delayed consumption on consumer behavior, all of that and it's creating an environment Chubb.
Pretty unprecedented in terms of the rapid increase in economic activity that's going on.
Okay.
And then just wanted to touch on you mentioned the APM to the tariff exclusions from trying to figure out should we think about that impact similar to the last time around or have you been able to find other sources for components or materials that may lessen the impact.
Now, let me comment on the tariff exclusions first.
Biden administration has changed the rules on tariff exclusions, it's very concerning to us.
The Trump administration recognized debt.
There were certain components that were not available.
Other locations.
They recognize that Jonathan.
The impact on on it.
Price is in the United States could be very high as a result of certain kinds of.
Yes.
Tariffs and so they had on it.
On exclusion process, which certainly wasn't perfect but.
<unk>.
Provided some substantial relief to blanket tariff increases at this point.
The New administration has not put any process in place.
Tariff exclusions, and we have really no idea what their future.
Plans may be in fact, we're not sure they do either.
At this point.
Yes.
I'm really serious situation I think theres a lot of concern in Congress.
This is not a good.
Policy.
Thank you.
Many many people understand it.
If the tariffs continue on China volume.
And large.
The bulk of at least in our case the bulk of what we buy in China would grow to some other low cost country. It wouldn't be repatriated to the United States because your costs would be too high even if you could find capacity too.
Produce it so.
I think thats the perspective, we have on on tariffs. We're certainly hopeful that eventually an exclusion process will be put in place maybe.
Maybe in the next quarter.
Or so.
That's certainly what we think got to happen and we just keep our fingers crossed that it does as to your second point.
We had already begun to diversify.
Our.
On a low cost supply chain and sourcing capabilities.
We have.
Sources.
In Vietnam, we have sources, particularly.
In India.
But as you know there are complexities in India right now given the impact of COVID-19 on our supply chain there, but we have active programs that are designed to.
Find other competitive.
Sources to Chinese components, Rajiv you want to add anything to that.
I think the first thing to recognize is China and if you just take costing we use a lot of talk in China by far.
The highest capacity for casting in fact may have more costing from the rest of the world together in terms of capacity.
And the significant amount of that.
Constant come from China, we are looking throughout the touristic flow.
Two other places.
But again the capacity is constrained.
The process flow not only by capacity, but also by the COVID-19, but that is on and that we will diagnose if not debt.
And let me just say.
Force Rajiv comment that's precisely what he just said is precisely why does there need to be an exclusion process.
The casting capacity typically doesn't exist in the United States and it's not likely to be put in place here.
Thanks, So much I appreciate all the thoughtful answers this winter and good luck with next quarter.
Thanks.
And once again, if you do have a question. Please press Star then the number one on your telephone keypad. Your next question is from the line of Brett Kearney. Please go ahead.
Hi, guys. Good morning, Thanks for taking my question and thanks for all the great color on the call. This morning.
Thanks.
Wanted to ask on <unk>, you mentioned it sounds like increased opportunity for product demonstration.
Could you just maybe elaborate it's probably a question for Lucian on the 25th this month, but.
Just kind of what opportunities you're seeing.
Obviously, you had success in the China bus market.
What else even if initial conversations at this stage youre seeing opportunities on the commercialization front for on Humira.
So maybe Rajiv would just comment a little bit on how we see the EBITDA.
Sales.
Cycle.
Evolving.
That really is what lies at the heart of.
The process of the end.
Resolved and getting bookings you've got to go through a cycle of activity Rajeev, yes.
Yes, thanks al assets and Youre right.
In much more detail on the 25th but let me give you a sense for it so you could imagine that predominantly.
Predominantly working with integrators and Oems.
Equipment.
And if I think about the segment.
The.
Primary areas around heavy duty vehicles.
<unk> buses.
On.
Some off road vehicles, including ours.
And the protest.
Talking of going through.
The front your question is.
Have a net electrification plan do you have on the electrified pardon me.
On that majority of the time day done.
Some of the time. The next question is have you thought about integrating hydrogen into your solution.
And again.
The net.
Our sales pace is integrating developing a solution than doing a pilot.
And then going into production.
Total moving people through that.
That whole process.
If I can just maybe talk about geographies youre right I mean over the last few years.
Our attention staying on China, because we felt that was a rapidly growing market.
Kind of related to reported by government initiatives.
A strong pickup in Europe, and we are starting to see some traction in North America and in our pipeline today, we have customers day in all of those regions.
We can put book will give you more color on that in May, but I think that hopefully that gives you your expense for the process, where youre coming to life.
Why is it taking time and also business development.
On development.
Which is closely tied together.
Rajiv just as a point of reference maybe.
We put.
Periodically new generations of internal combustion engines into our vehicles that meet different emissions standards that is not a short process, even something as determined and fixed as per.
Putting.
<unk> upgraded engine and would take sort of how long rajeev, yes.
We've seen we've done a lot of emission program could take between 24 and 36 months, depending on what else we need to change with the engine, which recently there's been a significant amount of the crop. So we think that day.
Integrated depends on where you are if you already have an electric.
Vehicle on electric platform, we think that from our 18 kind of average of around 18 month process.
From the hydrogen solution and if you have on internal combustion engine and you need to put to create an electric drivetrain and then put the hydrogen solution and that's more around a 36 month timeframe so debt.
In our corporate plus or minus depending on the customer and their infrastructure by that offensive.
It's pacing through to go through the growth debt on.
On the other hand, I would just note debt.
We're doing plenty of demonstrations and then there are.
Cash programs, we've been doing that in China.
Where our vehicles are being run with.
Our engines.
This is all part of the process of developing bookings.
We expect to be see an acceleration of that process.
Over the remainder of 2021, and then of course.
Incidentally in 2022 and three.
Great. That's very helpful. And then maybe just last one small item just curious what's the company's remaining stake in <unk>.
On H two at this point do you still hold on some amount of preferred or common equity in that business and I guess, what would be your intention sport going forward.
Yes.
We still have a small ownership on dislike always we always look at what's the best alternative for us.
Okay.
Moving forward so.
We're talking to the one extra day.
On that.
Potential ways of moving forward.
Certainly.
All of the remaining interest as a possibility.
Have to see how it all works out in the context of the prospects for <unk>.
<unk>.
If there is something specific to report will will reported.
I mean.
And the strategic let's say debt.
Athena.
Really focused on bear on the on the fuel cell engine side and this is positive.
Yes.
Reinforcing that direction.
Terrific. Okay. Thanks, so much.
And once again, if you do have a question. Please press Star then the number one on your telephone keypad.
And at this time Im showing there are no further questions.
Thank you.
Did you have any wrap up comments.
I have no.
Further wrap up comments on the ones that I gave earlier Christie.
Thank you again, everyone for joining us today as a reminder, as al mentioned on May 25th we'll be holding on Investor day, and the need with the.
The link to register for that will be going on thank you and have a good day. Thank you for listening.
Thank you for participating on today's Hyster, Yale Q1, 2021 earnings Conference call. This call will be available for replay beginning at two P. M. Eastern time today through 11 59 P. M. Eastern time on May 12, 2021, the conference I'd number for the replay is 808 six.
On 383 again the conference I'd number for the replay is 8861383 the number to dial for the replay is 18558592056 or 0453734.
Hey, Ross. Thanks. Thank you for participating you may now disconnect.
Okay.
Yeah.