Q2 2021 Hyster-Yale Materials Handling Inc Earnings Call
In the region.
[music].
Good day, and thank you for standing by and welcome to the high <unk>.
Q2, 2021 earnings conference call.
At this time all participants are in a listen only mode. After the Speakers' remarks, there will be a question and answer session.
Ask the question during the session you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded.
If you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today Christina <unk>. Please go ahead.
Thank you good morning, everyone and thanks for joining US today welcome to our 2021 second quarter earnings call I am Christina <unk> and I'm responsible for Investor Relations at Hyster Yale So.
Joining me on today's call are Al Rankin, Chairman and Chief Executive Officer, Rajiv Prasad, President and Ken Schilling, Our senior Vice President and Chief Financial Officer.
Yesterday evening, we published our second quarter 2021 results and filed our 10-Q. This information is available on our website. Today's call is also being webcast. The 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 in the forward looking statements made here today.
These risks include among other matters that we have described in our earnings release issued last night and in our 10-Q 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 results. The first.
Let me turn the call over to our chairman and CEO Al Rankin for some opening remarks al.
Thanks Christy.
Morning, everyone.
Our results for our 2021 second quarter once again very mixed on that at all of the level, we thought we'd be reported for this quarter.
As we predicted last quarter, the lift truck market demand during the second quarter.
Was strong and continued to grow, albeit at a more moderate pace on the previous 2 quarters.
As a result of the market growth as well as share gains.
Bookings were extraordinarily strong and the rec.
Current levels, which helped to generate a new record with the truck backlog level.
Reading the historically high level achieved in the first quarter.
Given these factors, we have solid production and volume plans in place and are fully slotted for the remainder of the year and into the early part of <unk>.
1 of 22 on.
On the other half of them.
During our last earnings call.
And even more so during our Investor day in late May.
<unk> indicated that our expectations for the second quarter, we are dependent on our suppliers' ability to produce components in our ability to work through the logistics constraints.
I needed to get those component parts to our factories on a timely basis.
As most everyone is aware of the.
Global supply chain and logistics constraints.
Constraints, we saw in the first quarter did not moderate and they have in fact gotten worse.
For us and of.
A way very similar.
To what many other companies are experiencing that's had a severe impact on our ability to ship in the second quarter, particularly higher price backlog product.
As a result of our second quarter shipments were substantially lower than we expected probably buy something.
Up to about 4000 units.
With the large portion largest portion in our Americas Division, we're receiving components needed to build certain trucks on schedule was quite poor.
These factors coupled with consistently rising material and logistics costs led to a substantial decrease in our second quarter margins.
Subsequently significantly reduced second quarter operating profit of net income at the levels that were much lower than were expected and lower than the 2021 first quarter.
While these results were not what we had planned or expected. Our team continues to work diligently to obtain the components, we need on a timely basis and with an appropriate inventory on hand.
Given our very high backlog.
And the visibility it provides the opportunity for increased production.
By chain bottlenecks are resolved at this high.
Afterwards to produce the financial results for the quarter.
<unk> will provide more detail on the supply chain issues as well as provide an update on our business operations and strategic projects.
Ken will then discuss our outlook in this dynamic environment Chris.
Christine.
Thank you.
Start with the quarter highlights and then discuss the individual segments.
And then this quarter, especially each of our segments has a very different results story.
As Ellen mentioned, we had record bookings of 46900 units in the second quarter bookings were up 10, 6% from the 2021, the first quarter, which had been a previous record by a large margin and they were significantly higher than the 14300 units booked in the prior year second quarter, which was the period most.
Heavily impacted by the pandemic.
We ended the quarter with historically high backlog of 84900 units.
Our second quarter shipments increased 12, 9% driven by our EMEA and <unk> segments and our revenues.
The increased 17% from the abnormally low second quarter of 2020 of unit shipments and revenue.
However, as al mentioned the shipments of much slower than expected, primarily as a result of supply chain disruption.
Higher unit shipments and parts volume in the lift truck business and it builds on the from increased customer demand along with favorable currency movements were the primary drivers for the increase in 2021 second quarter consolidated revenues to $765.5 million from $654.4 million.
Last year.
The higher revenues, our consolidated operating profit decreased to $5.9 million from $8.7 million in the prior year.
This was the result of several significant factors, including material and freight cost inflation of $11 million unfavorable manufacturing variances of $5 million, resulting from the inefficiencies associated with the component shortages.
Proximately $14 million of higher operating expenses due to the elimination of many of the cost containment actions taken in 2020.
Well. These are the main drivers of the decrease in our expected to continue to be headwinds throughout the remainder of the year. Our operating profit also included the recognition of $6.2 million.
<unk> of income in the Americas from the favorable court ruling in Brazil regarding social contribution taxes previously imposed on material purchases.
Net income was more than offset by the absence of $8.3 million of government subsidies received in the EMEA and both of any segment in the second quarter of 2020.
As a result of all of these factors our consolidated net income decreased to $1.9 million or <unk> 11 per share from $3.6 million of 21 per share.
Turning to our segment results in our lift truck business.
The quarter operating profit decreased to $15.4 million from $17 million in the prior year quarter, mainly due to a significant decrease in the Americas operating profit, resulting from the specific factors I noted in the discussion of our consolidated results.
This was partly offset by operating improvement largely due to higher gross profit on higher sales volume in both EMEA and <unk> segments.
At <unk> revenues for the second quarter increased 32, 1% and the results improved moderately to an operating loss of $400000 from the loss of $500000 in the prior year second quarter the.
The improved results were primarily attributable to an increase in gross profit from higher sales volumes of higher margin products and lower manufacturing costs due to improved operating efficiencies that were partially offset by increased cost for materials and freight cost inflation.
The gross profit increase was mostly offset by higher operating expenses from the reinstatement of pre pandemic employee compensation.
<unk> included the impact of $3.6 million of government subsidies received in the prior year.
Finally in Nevada revenue decreased to $300000 in the second quarter from 700000 in the prior year and the operating loss increased moderately to $9 million from $8.3 million in 2020.
The operating loss was primarily attributable to the reinstatement of pre pandemic salaries and benefits and the absence of the $600000 gain on sale of assets recognized in the prior year.
That completes the update of results for the quarter now let me turn this over to Rajiv who will provide an overview on our operations on our strategic projects.
Thank you Christie.
Let me stock price.
Saying that on a global team has performed very well in these challenging.
Environment.
Sales team was effectively executed our strategies by generating record bookings and the strong market.
Many industry industries, including ours are experiencing a significant increase in demand as market recovers.
This is closing.
Significant stress on the global supply chain.
The only intensified over the past quarter.
On supply chain group continue to work diligently to address the challenges related to supply constrained on logistics challenges.
That where our largest single issues this quarter.
As al mentioned lift truck market activity continued to grow in the quarter, but at the slower rate than we have experienced in the past 2 quarters the.
The global lift truck market increased more than 70% over the second.
Quarter of 2020 of which was the quarter most heavily impacted by the pandemic.
Compared to the first quarter, the global lift truck market increased 4.7% primarily driven by.
And the 11, 9% increase in the EMEA.
The marketing proof of improvements over the first quarter combined with the company's share gain programs as well as long lead times and pull forward of orders before price increases went into effect translated into an increase in the company.
121, second quarter bookings and exceeded market growth.
Despite bookings, which far exceeded the expectation unique unit shipments.
Modestly higher than the.
2021, FERC quarter due to component shortages delays due to logistic issues and supply constraints.
The increase in bookings and lowest shipment of also led to another significant increase in backlog.
Over the 2021.
Third quarter.
And 2 of historically high backlog level, which.
The us extending delivery lead times book substantially.
We expect the lift truck market growth rate for the remainder of the year to decrease compared with the high levels in the first half of 2021 as market begin to return to pre pandemic levels.
As a result, we're anticipating a substantial decrease in bookings in the second quarter of 2021.
Second half of 2021 compared with the first half of the year net.
As the result of the strategic projects, we've continued to pursue at each of our businesses. We expect increased bookings in the second half of 2021 over the same.
Prior year period at levels higher than the expected year over year market rate growth rate.
The strategic projects.
Gain traction in the first half of 2021.
The definitive timeframe for achieving full potential of share gain results, but still uncertain.
Both the timing of the full impact of the strategic projects and the continuing financial impact of the pandemic.
On subsequent pandemic related supply chain and cost challenges.
Now, let me spend a few minutes discussing on strategic projects.
Despite the potential of volatility of near term economic activity, we've continued to execute our long term strategy.
Advancing our key strategic initiatives.
1 of the essentially all of the projects required to execute our initiatives continue to continue to move forward in the context of Covid 9.
The 19 pandemic on current logistics challenged the pace of certain projects that have been given greater emphasis on others.
The Sip and certain accelerated projects have experienced delays as the result of the impact of pandemic.
Although the continued increase in bookings amount of historically high backlog.
To reinforce the long term potential payoff from the program.
We've continued to introduce new products.
On.
The primary focus in the lift truck business is on the new set of modular and scalable product family for both in term of combustion engine and electric trucks.
We launched the first of these new modular.
The standard version of the 2 to 3 ton internal combustion engine lift truck for the EMEA market in mid April.
These new EMEA trucks have been very well received on the launch of this new range of 2 to 3 ton counterbalanced trucks to other markets is expected to continue throughout 2021 on into 2022.
We expect the modular structure of these new products to enhance our ability to meet customer needs at the <unk>.
Lowest cost and the.
And the way that is more specific to their application.
Both of the industry level and at the individual customer level.
In this rapidly changing environment, we have accelerated our efforts to finalize the implement our industry strategy and our investment in industry focused sales capabilities to support.
Dealers.
Given the Covid environment.
We are also focused on enhancing our remote selling capabilities through technology enhancements.
Which we used very successfully in our launch of the new much of their trucks.
Both on the continues to focus on implementing of 1 company 3 brand organizational approach to help streamline corporate operations and strengthen as the North America and JP commercial operations.
It is also focused on increasing as the Americas business on <unk>.
Strengthening of the ability to serve industries in North America.
Mark.
Market by introducing a broad range of locally produced the attachments with shorter lead times and through continued to sales cylinder and various other components produced and the diligent Alabama plant.
Moving to continues to focus on serving heavy duty application, particularly bus and truck applications, where the 45 and 60 kilowatt engine.
Which were both released with sales during 2020 as a result of the milestone Nevada has accelerated the $45.60 kilowatt engine commercialization operation for the global market and is focusing on ramping up demonstration quotes and bookings for these products in 2021.
With firm booking expected in the second half of the and.
In addition, Nomura has initiated development of the new 125 kilowatt engine.
Overall, we believe the company will emerge stronger from the pandemic event and that our strategic projects will reinforce that position on.
I'll now turn the call over to Ken for an update on future quarters on liquidity.
Thanks Rajiv.
While recent lift truck and bolt on the market and booking activities have been strong and better than expected the level of future bookings and importantly, the timing of shipments from our backlog are still uncertain.
Overall hyster Yale continues to operate on the assumption that economic and market environment.
Of our grain difficult for the at least the remainder of this year until Covid and its variants of our mitigated through the broad acceptance of vaccines and subsequent herd immunity and supply chain issues related to post high post COVID-19 demand levels are resolved.
Early in 2020 to mitigate the impact of pandemic related shutdowns, we initiated cost reduction measures.
These measures included spending on travel restrictions significant reductions and temporary personnel furloughs and salary reductions and suspension of other benefits including incentive compensation.
Effective January 1.2021 were reinstated pre pandemic salaries, the benefits and incentive compensation programs.
The other cost containment actions are generally still in place and are expected to remain in place until market and economic uncertainty dissipates and our results improve.
As a result operating expenses increased by approximately $14 million in the second quarter, primarily from the restatement of salaries benefits and incentive compensation to pre pandemic levels.
And the 2024th quarter, we restructured some of our lift truck operations to reduce our long term cost structure. We anticipate we will incur charges of approximately $800000 over the remainder of 2021 for additional costs related to this restructuring.
Estimated benefits from this program are expected to be approximately $9 million annually beginning in 2022.
Our lift truck business adjusted production levels at our manufacturing plants early in 2020 to align them more closely with the lower market demand and target booking levels and had been building those production levels back up moderately over the past 12 months.
Given the strong bookings in the prior year fourth quarter and the first half of 2021 as well as backlog levels now at a historical highs higher bill rates of first seemed reasonable appeared reasonable for 2021, but as a result of continuing supply chain and the logistic constraints, the hyster Yale group and bolt on it.
Have not been able to achieve the production levels. The originally planned for the first half of the year, our production challenges lie mainly with timely obtaining products from suppliers and not as a result of labor shortages.
Like a number of companies are struggling with both.
We are beginning to see some improvement in supply chain, but production levels are expected to experience continued disruption in the third quarter of 2021 with easing anticipated in the fourth quarter. However.
However, we are hopeful that these challenges will abate sooner and production levels will be able to be increased above current client levels for the second half of the year.
Significant material cost inflation and higher freight costs are also expected to continue into the second half of the year and the non renewal of the U S. Tariff exclusions is also expected to affect the cost of components during the remainder of the year.
Both of our lift truck on bolt on businesses have announced and implemented multiple price increases to moderate the effect of material cost inflation, which was a headwind to earnings in the first half of the year and the amount of $13.3 million.
But many of the orders and backlog slotted for production of 2021 do not reflect the full impact of all of these price increases.
As a result, we expect to continue to experience margin pressure throughout the rest of 2021 due to the lag between when these price increases went into effect and when they are realized since the customer orders and backlog are generally price protected.
We will continue to closely monitor with suppliers to increase components supply levels and production levels, we anticipate that commodity costs will remain elevated through the second half of the year. However, the level of these cost increases, particularly for steel.
It remains volatile and sensitive to changes in the global economy, and 2 levels of tariffs that could be higher or lower than currently forecasted.
We will continue to monitor potential future components supply and logistic cost and tariffs closely and adjust prices accordingly.
As a result of the factors in the increase in costs associated with the reinstatement of pre pandemic salaries and benefits as well as the loss of the Covid related government subsidies, we expect substantially lower consolidated operating profit and net income in the second half of 2021 compared with.
The second half of 2020, primarily due to the Americas and EMEA lift truck businesses with.
With the anticipated operating and net losses in the third quarter of 2021, partly as a result of Hyster Yale group seasonal third quarter plant shutdowns the.
The anticipated decline in results is expected to be partly offset by significant increases in bolt on these operating profit and net income in the second half of the year compared with both the respective prior year period, and the first half of 2021.
Let me take a step back and explain our expectations for the second half of 2021 are based on the most recent information we have available, but as past quarters and this quarter in particular have shown the effects of the pandemic on the global economy and more specifically the lift truck market and related operating environment can change <unk>.
Expectations rapidly.
Further hyster, Yale shutdowns or supplier shortage could occur as a result of the new Delta variant that has emerged globally. We are monitoring COVID-19 hotspots, including closely monitoring a number of our suppliers based on areas, where COVID-19 cases are high.
We are prepared to take further action if necessary to maintain the health and safety of our global workforce and to address production and supply issues, which may develop.
As a result, the uncertainty of the supply chain recovery timing and the ability of the supply base to timely deliver continues to limit our ability to forecast bookings and more significantly shipment levels beyond the third quarter of 2021.
Despite these challenges we expect to increase our investment in working capital and other expenditures to support growth in our business. We anticipate capital expenditures will be approximately $50 million in the second half of 2021, while we expect to make the substantial additional investments in the business during the remainder of the year main.
Turning liquidity also continues to be a priority.
At June 30, we had cash on hand of $87.5 million and debt of $345.7 million compared with cash on hand of $103 million and debt of $285.4 million.
At March 31.
In May 2021, we replaced our prior of $200 million term loans, which had a remaining balance of $162.5 million with a new $225 million term loans.
All of that we contributed to the increase in debt outstanding at the end of the second quarter as a result of the issuance of the the new term loans.
In addition, as of June 30 of 2021, we had unused borrowing capacity of approximately $313.9 million under our existing revolving credit facilities, including our recently refinanced asset backed revolver.
Compared with 265 million at March 31, 2020 in conjunction with these debt refinances.
<unk> expense $1.5 million of deferred financing fees, which are included in other income expense in our earnings release.
I'll now turn the call back over to al.
As we close out the first half of 2021.
We will be focusing on managing effectively the challenging and dynamic environment.
We continue to execute our mid term and our long term strategies and remain focused on the safety of our employees.
Our strategy for the longer term it is clear and transformative or project as well as the explicit objectives with the Hyster Yale group, where both Sony and for the new bearer of businesses support this long term strategy, but as we've discussed near term prospects are uncertain as a result of the number of.
Immel largely external influences spin.
Specifically, the direct impact of the pandemic on some markets suppliers.
Suppliers manufacturing levels around the world and logistics issues, which collectively create supply and cost challenges as well as the timing of the adoption rates for key fuel cell market segments and markets are strong we have of record lift truck backlog of strong current booking environment.
And 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 chip on opportunities are very significant.
It is difficult for us to forecast when the kind of nearer term.
Increases will occur given the supply and logistics difficulties. Nevertheless, when these challenges are mitigated. We believe we will deliver solid sales and earnings performance and that our long term strategies and prospects will have a very significant positive impact in the future.
We will now turn to any questions you may have.
Thank you at this time I would like to remind everyone in order to ask the question Press Star then the number 1 on your telephone keypad again that the Star then the number 1 on your telephone keypad low phosphate.
Phosphate that at the moment to compile the Q&A roster.
We have referenced the question coming from the line of Steve <unk> with Sidoti and company. Your line is open.
Just wanted to kind of sense I know of 3 months for a long time during the day issues arent unique to you on just trying to get a sense from the.
On the last call you were talking about how you would work through of wallet of the supply chain issues through the quarter.
We're in a lot better position most of you can sort of walk through.
Exactly will happen over the next 3 months as best you can but again these on each year, but I'm just trying to get a better understanding of.
Where you stand now versus versus 3 months ago.
Let me just lead off with a question that I would like to turn it over to rich.
Rajiv.
But in response I'd, just say that.
We were hopeful that some of these headwinds were going to moderate.
In fact, what we've seen as the genome.
The upsurge in demand in the.
On the generally.
Has been enormous as you know theres a lot of stimulus.
In the U S economy right now.
And.
Demand.
Mix and the economy overall shifted to.
Some degree of niche of lot of goods.
That are putting pressure on supply chains both domestically.
The supply chain and logistics domestically and internationally.
The.
In the shipping area of where company moving towards the east.
Season, when many companies are are bringing in the inventories that are necessary to sustain their businesses.
During the high selling season.
November and December.
So there is particular supply chain pressure and on container.
Of course.
Quarter of space on.
On Ocean freight.
Been going up.
Quite rapidly.
So the environment has continued to evolve and it hasnt been.
Evolved.
The positive perspective in terms of logistics.
Costs.
Squeezed between supply and demand is causing overshoots and.
And the prices phenomenon that we've seen on.
Many times in the past.
So rajeev with that introduction would you like to elaborate.
Yes, Joe of tanks now I think thats the good overview, maybe asking maybe a little bit more specific.
So what we saw Dave in the the.
The quarter was over the quarter the number of components on the number of suppliers.
The improved.
And we've seen that kind of stabilize in the second quarter, we expect of that improvement to continue in the second quarter, but because of some of the reasons I've talked about we kind of stabilize of those levels nadeau of better than the early part of the third quarter, but still as you can imagine.
And the.
1 of 2 critical parts on there we can make the truck.
Now we would then the.
Later in the second quarter hit by some of the Delta virus spread particularly in India.
And some of the other areas and as you know we have of global supply chain.
So I think that did.
The make things a little bit was 2 of the second half of the second quarter on.
The final element of.
There are other logistic constraints, but also there is.
The timing of when your <unk>.
Container of the going to come in is very volatile.
That leads to very short term.
Disruption and when part actually get to our plants.
And the late cancellations of things that we can adapt easily.
So those of the some of the elements.
The continued throughout the second quarter.
The they're with us in the in the third quarter of little bit improved book.
The still has the pretty.
Pretty difficult on dynamic situation for our supply chain team.
Just to give you a little of sort of flavor for.
For that environment.
Rajeev you would agree we have on.
Most of the small army of people, who are daily tracking the arrival of components at our plants readjusting the build schedules.
To build the whatever trucks.
We have the components for and constantly readjusting things, it's not a good way to have to run manufacturing facilities.
But that's the sort of environment were operating again, and we're being very proactive and doing a lot of expediting and facilitating.
But it's some of the factors Rajiv.
Outlined are just not things you kind of overcome it entirely at all.
Just to finalize that Steve as we look forward.
On.
We're continuing to have detailed discussion with our supply base and as you can imagine we need to ramp up of our production rates because of the backlog on the associate can lead times.
But we're doing that in the context of what the supply chain can handle.
And so.
The portion is being managed very carefully.
On.
The inefficiencies.
The driven into the operation can be as you can see that in the.
Some of the manufacturing variances that we have.
We talked about it quickly and of note.
In the commentary.
Fair enough.
So the.
<unk> now because the.
The enormous backlog you have high bulk Ken touched on it a little bit.
In terms of do you have any options to reset some of that the pricing on that older backlog because of the stack pulls through over the next 3.4 quarters.
Getting more material prices are now.
The has the potential of <unk>.
Several quarter issue for us.
Each 1 of them.
Take that.
You are right I mean, thats out of we said that we're kind of in the slotting into the low.
<unk> net a part of 2021 and in fact in some cases in the early part of 2022.
So suddenly inflation is going to take.
Make have.
Have an impact on the second half results as we've noted.
With their actions, which I won't go into trying to moderate.
And you can imagine what those could be I mean, we're working with our supply chain, but also working with our customers.
The order profile as such the.
The prices of loss payments certain prices.
Really dependent on when we delivered front of the majority of locked in.
So it is a difficult environment.
We are working through it.
On.
<unk>.
In the we feel the as we get into 2022.
We will the with the price increases we've put in place.
We should see margins revert back to normal level.
But we will happen because of a few quarters to go through the theyre going to be see some margin compression and Steve the runoff.
Net.
Net.
I'll start.
Let me just add to that.
1 of the great difficulties, we have as forward forecasting.
Of material cost increases.
And I use increases advisedly because.
At some point.
We feel that supply and demand are going to come into a better equilibrium.
And that the.
The prices.
Go down very significantly.
Well, it's not an example from our industry.
<unk> aware of what happened to timber prices in a very very short period of time on that as they went down by something like a third so.
On.
We can't say with certainty.
What the impact will be.
The the fixed price.
On our backlog.
Without knowing what the cost turned out to be when we do.
Produce those trucks of our hope is that.
As we move forward, especially in 2022 some of these material cost increases are going to be.
Moderate so that's in addition to the pricing increases on new businesses, new business, which Rajiv, particularly emphasized Ken do you want to say something.
Yes, I just wanted to remind I did use the word on multiple price increases and we of layers in our backlog of trucks that are booked at different levels and as we move through those earlier the layers, we get to layers that have.
Stronger pricing.
The <unk> point on the look forward.
Our goal is to match our expected material price cost at the time of delivery and so we'll continue to move and look at how we can adjust prices to match to the cost as we expect them to be when we build the trucks. So.
That's an ongoing process and we don't have a perfect crystal ball, but we are that is clearly an input in our process to set the prices that we that we quote to our customers.
And then just in terms of the stickiness of that backlog of you've seen in the change.
No no I think the <unk>.
Backlog is pretty sticky, we don't expect a lot of dynamics in that backlog.
And.
No.
For various reasons.
Moving.
We have long term relationship with customers.
This is generally what's happening in the marketplace lead times the extended.
Great. Okay. Thank you all for your time.
Thank you thank.
Thank you Steve.
We have our next question coming from the line of Brett Kearney with Gabelli funds. Your line is open.
Hi, guys. Good morning, Thanks for taking my question.
Alright.
Okay.
Just wanted to ask on the opportunity you're seeing with the new larger on Humira and Jim.
That's in the development Phase 125 kilowatt engine and the applications I guess opportunities that you see for that offering.
Sure.
And.
I'll, maybe take the storm on.
Yes would you take that 1 share.
The issue.
As you've heard.
Do you feel that the 45 and 60 kilowatt engines on the right powertrain for the kind of medium size buses and trucks.
Initially and as we've described before a theory.
Hybrid powertrain.
But the market is continuing to request big of vehicles, including our own.
Reached factor on our top picks that we have in development and we've shared with.
With the market on the <unk>.
<unk> share of that actually use of $2.45 kilowatt engine.
And so you can see what it really needs is somewhere around 100 to 125 kilowatt 10 day methods.
As a baseline so.
What's driving the development, though we would go from the medium sized trucks and buses to the heavier.
And the.
You would think about.
In terms of truck classes the medium size is good for.
North of 5 and 645 and 6.
Cloth.
Commercial trucks, and then the bigger engine would be most suitable for 7 and 8.
<unk>.
So and then larger of buses that are based on the flat.
Of those types of the platform.
Does that give you the there are a number of other sort of.
Rajeev you might just mentioned some of the specialty segments that we think are particularly applicable in.
Sure.
Can imagine on the plus 7 type the chassis that's the way.
You have things like cement mix of U.
<unk>.
<unk>.
Handling machine.
The more severe duty trucks.
Which are which there is more pressure on.
For them to find the.
The sustainable solution.
So we think those bigger engines there'll be most suitable wholesale some of the segments that we haven't discussed such as marine on locomotives.
Great. That's very helpful. Thanks, so much.
Okay on in order to ask the question since the first time then the number 1 on your telephone keypad.
It appears we don't have any more questions Celine.
Is that correct.
Yes, ma'am as there are no further questions at this time.
Okay. Thank you Al received did you have any final remarks, you wanted to make.
No.
Okay.
Not for me Okay. Thank you. Thank you all for joining us today and we do appreciate your interest and if you do have any follow up questions. Please give me a call. My information is available on the earnings release, Thanks and have a wonderful day.
Okay.
This concludes today's conference call. Thank you for your participation as a reminder, a replay will be made available free average after the call until August 11, 2021, 23, 59 interest income you may listen by dialing 80058 side.
<unk> 7 or 8585920.
Followed by the conference I'd number thanks, Darren Hicks won 4 of 2.3. Thank you you may now disconnect.
Yes.
Okay.
Okay.
[music] cash.