Q1 2025 Hyster-Yale Inc Earnings Call
Yeah.
Operator: Good morning, ladies and gentlemen, and welcome to the Hyster-Yale Inc. First Quarter 2025 Earnings Call. At this time, all lines are in listen-only mode.
Speaker Change: Good morning, ladies and gentlemen, and welcome to the Hi.
Speaker Change: Hyster Yale Inc. First quarter 2025 earnings call.
Speaker Change: At this time all lines are in listen only mode. Following the presentation, we will conduct a question answer session.
Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.
Speaker Change: If at any time during this call you acquire immediate assistance. Please press star zero for the operator.
Operator: This call is being recorded on Wednesday, May 7, 2025.
Speaker Change: Call is being recorded on Wednesday may 7th 2025, I would now like to the conference call over to Andrew Weber. Please go ahead.
Andrea Sejba: I would now like to turn the conference call over to Andrea Sejba. Please go ahead. Good morning and thank you for joining us for Hyster-Yale's first quarter 2025 earnings call. I'm Andrea Sejba, Director of Investor Relations and Treasury.
Speaker Change: Good morning, and thank you for joining us for Hyster, Yale first quarter 2025 earnings call I'm, Andrea Saba director of Investor Relations and Treasury. Joining me today are al Rankin Executive Chairman, Rajiv Prasad, President and Chief Executive Officer, and Scott Mender.
Andrea Sejba: Joining me today are Al Rankin, Executive Chairman, Rajiv Prasad, President and Chief Executive Officer, and Scott Minder, Senior Vice President, Chief Financial Officer and Treasurer. During our call, we will be discussing our first quarter 2025 earnings release issued yesterday. You can find the earnings release and a replay of this webcast on the Hyster-Yale website. The replay will remain available for approximately 12 months.
Speaker Change: Senior Vice President Chief Financial Officer, and Treasurer.
Speaker Change: During our call we will be discussing our first quarter 'twenty 25 earnings release issued yesterday, you can find the earnings release and a replay of this webcast at a hyper Yale website <unk>.
Speaker Change: A replay will remain available for approximately 12 months.
Andrea Sejba: Today's conference call contains four booking statements, which are subject to risks that could cause actual results to be materially different from those expressed or implied. These risks are described in greater detail in the earnings release and in our reports filed with the SEC. On this call, we will discuss our adjusted results. We believe that these are useful in evaluating the company's operating performance. Reconciliations of adjusted operating profit, net income, and earnings per share to the most directly comparable GAAP financial measures can be found in the company's earnings release and investor presentation filed with the SEC.
Speaker Change: Today's conference call contains forward looking statements, which are subject to risks that could cause actual results to be materially different from those expressed or implied.
Speaker Change: These risks are described in greater detail in the earnings release and in our reports filed with the SEC.
Speaker Change: On this call we will discuss our adjusted results we.
Speaker Change: We believe that these are useful in evaluating the company's operating performance.
Speaker Change: A reconciliation of adjusted operating profit net income and earnings per share to the most directly comparable GAAP financial measures can be found in the company's earnings release and Investor presentation filed with the SEC.
Rajiv Prasad: With the formalities out of the way, let me turn the call over to Rajiv to begin. Thanks, Andrea, and good morning, everyone. I'll start by sharing our outline on the current economic environment, how it impacts Hyster-Yale, and how we plan to address these challenges in our business.
Speaker Change: With the formalities out of the way, let me turn the call over to Rajiv to begin.
Rajiv Prasad: Thanks, Andrea and good morning, everyone.
Rajiv Prasad: I'll start by sharing our outline on the current economic environment.
Rajiv Prasad: Impacts I see yeah.
Rajiv Prasad: And how we plan to address these challenges in our business Scott will follow with a detailed financial results.
Scott Minder: Scott will follow with our detailed financial results, the assumptions built into our 2025 forecast, and our outlook for the second quarter and full year.
Rajiv Prasad: The assumptions built into our 2025 forecast.
Speaker Change: Our outlook for the second quarter and full year.
Rajiv Prasad: I will provide his perspective to wrap up our remarks, and then we'll open up. call for your questions.
Speaker Change: Al will provide his perspective to wrap up our remarks, and then we'll open up the call for your questions.
Rajiv Prasad: Since we last spoke in February, the global economic landscape has changed significantly. Becoming more uncertain as a result of tariff policy. This shift required us to quickly reassess our sourcing, selling, and production strategies. Adapting for what we know today and preparing for what may come in the future. Despite the challenges posed by the current economic environment, our commitment to delivering optimal solutions remains unwavering. We are confident in our ability to drive substantial long-term growth and profitability while adapting to the complexities of the global economy. While we have confidence in our actions, it's important to acknowledge the significant uncertainty created by shifting tariff levels and the corresponding effects on market demand and our cost structure.
Speaker Change: Since we last spoke in February the globally economic landscape has changed significantly.
Speaker Change: Becoming more uncertain as a result of tariff policies.
Speaker Change: This shift required us to quickly reassess our sourcing selling and production strategies adapting for what we know today and preparing for what may come in the future.
Speaker Change: Despite the challenges posed by the current economic environment.
Speaker Change: Commitment to delivering optimal solutions.
Speaker Change: Some wafer.
Speaker Change: We're confident in our ability to drive substantial long term growth and profitability, while adapting to the complexities of the globally economy.
Speaker Change: While we have confidence in our actions.
Speaker Change: Important to acknowledge the significant uncertainty created by shifting tariff levels and the corresponding effect on market demand and our cost structure.
Rajiv Prasad: This macro-level uncertainty requires us to be agile, remain responsive to market changes, and work to preserve our financial outlook. In the near term, we're taking action to maintain a solid financial position. We're applying lessons learned from pandemic era supply chain inflation by proactively monitoring our input costs, taking action to reduce them where possible, and quickly adjusting sales prices to offset any remaining cost increases. In Quarter 1 2025, we adjusted our prices to address component inflation since our last broad pricing action in 2022 and to include known tariff-related costing . Over the medium term, we're leveraging our strategic initiative to further strengthen our business in all economic environments.
Speaker Change: This macro level uncertainty requires us to be agile remain responsive to market changes and work to preserve our financial outlook.
Speaker Change: In the near term.
Speaker Change: Taking action to maintain a solid financial position.
Speaker Change: We are applying lessons learned from pandemic era of supply chain inflation by proactively monitoring our input cost taking action to reduce them, where possible and quickly adjusting sales prices to offset any remaining cost increases.
Speaker Change: In quarter, one 2025, we adjusted our prices to address component inflation since last broad pricing action in 2022 and to include known tariff related cost increases.
Speaker Change: Over the medium term, we are leveraging our strategic initiatives to further strengthen our business in all economic environments.
Rajiv Prasad: Generally, our strategy is to produce and sell products in the same region to avoid excess shipping costs and enhance delivery time for assembled to order products.
Speaker Change: And really our strategy is to produce and sell products in the same region to avoid excess shipping costs and enhanced delivery time for assembled to order products.
Rajiv Prasad: Today, our U.S. domestic operations account for approximately 65% of sales. This localized production helps reduce costs and mitigate finished vehicle tariffs. However, our global component sourcing strategy increases tariff exposure in today's environment. We will strive to minimize supply from high-tariff countries, but some materials are only available from these geographies. While we continue to push for new economically viable sources, our increasing line-up of modularly designed vehicles enables us to produce the same models across multiple facilities of both our suppliers and our own assembly operations. This allows us to maximize output across our global manufacturing network while minimizing input costs.
Speaker Change: Good day.
Speaker Change: <unk> domestic operations account for approximately 65% of sales.
Speaker Change: This localized production helps reduce cost and mitigate finished vehicle tariffs.
Speaker Change: However, our global components sourcing strategy increases tariff exposure in today's environment.
Speaker Change: We will strive to minimize supply from high tariff countries, but some.
Speaker Change: Cereals are only available from these geographies.
Speaker Change: While we continue to push for new economically viable sources are increasing lineup of modular lead designed vehicles enables us to produce the same models across multiple facilities.
Speaker Change: Both our suppliers and our own assembly operations.
Speaker Change: This allows us to maximize output across our global manufacturing.
Speaker Change: Fracturing network, while minimizing input costs.
Rajiv Prasad: It improves overall operational efficiency and increases our ability to manage shifting market conditions.
Speaker Change: It improves the overall operational efficiency and increases our ability to manage shifting market conditions.
Rajiv Prasad: Our long-term strategic focus on driving profitable growth through innovation and operating efficiency is clear. Our approach is rooted in thorough analysis and deliberation, ensuring that every decision supports the long-term health and success of our company. This enables our business to adapt intelligently to evolving market dynamics and deliver value to stakeholders across the business cycle. While the current landscape remains volatile, we'll continue to actively evaluate and implement a broad range of short and long-term mitigation strategies. These strategies, some of which require significant time and expense to implement, may require greater clarity and stability in the global trade environment before taking action.
Speaker Change: Our long term strategic focus on driving profitable growth through innovation and operational efficiency is clear.
Speaker Change: Our approach is rooted in power analysis and deliberation, ensuring that every decision support for long term health and success of our company <unk>.
Speaker Change: This enables our business to adapt intelligently to evolving market dynamics and deliver value to stakeholders across the business cycle.
Speaker Change: While the current landscape remains volatile we will continue to actively evaluate and implement a broad range of short and long term mitigation strategies. These strategies some of which require significant time and expense to implement may require greater clarity and stability in the globe.
Speaker Change: Trade environment before taking actions.
Rajiv Prasad: We'll provide updates in the coming quarters as new plans emerge.
Speaker Change: We will provide updates in the coming quarters as new plants emerge.
Rajiv Prasad: We're a resilient company, having emerged stronger and more agile from the pandemic with a clear direction and long term dedication to achieving our goals. We're confident in our ability to manage through current uncertainties and make progress on our objectives.
Speaker Change: A resilient company, having emerged stronger and more agile from the pandemic with a clear direction and long term dedication to achieving our goals.
Speaker Change: We are confident in our ability to manage through current uncertainties and make progress on our objectives.
Rajiv Prasad: Turning to our view on global demand, despite the volatile global environment, the lift truck booking market showed encouraging signs of recovery in the Americas and particularly in EMEA. The market is expected to further stabilize throughout 2025. That improving view could change due to potential tariff effects, which we believe caused customer order hesitation in April. To support the first quarter bookings growth, our production rates are expected to increase in the second quarter. We expect to maintain a strong $1.9 billion backlog. as we continue to keep production aligned with adjusting bookings. This will be balanced while adjusting pricing to counter inflation and mitigate tariffs.
Speaker Change: Turning to our view on global demand despite the volatile global environment. The lift truck booking market showed encouraging signs of recovery in the Americas and particularly in EMEA.
Speaker Change: The market is expected to further stabilize throughout 2025.
That improving view could change due to potential tariff effects, which we believe caused customer order hesitation in April.
Speaker Change: To support the first quarter bookings growth our production rates are expected to increase in the second quarter.
Speaker Change: We expect to maintain a strong $1 9 billion dollar backlog.
Speaker Change: As we continue to keep production aligned with adjusting bookings this will be balanced while adjusting pricing to counter inflation and mitigate tariffs.
Rajiv Prasad: Next, I'll provide an overview of the strategic business realignment related to Nuvera that we announced on April 30th. This initiative is designed to enhance near-term profitability and create an integrated energy solutions program at our Billerica, Massachusetts facility as part of our lift truck business. This realignment includes three key areas. First, the development, manufacturing, and commercialization of lithium-ion battery modules, charges, battery management systems, and energy management services. These products are critical for the lift truck business, as next-generation lithium-ion batteries are expected to increasingly replace lead-acid batteries in electric forklift trucks. Second, the development and commercialization of a mobile, modular, and scalable hybrid electric charging platform.
Speaker Change: Next I'll provide an overview of the strategic business realignment related to Nevada.
Speaker Change: That we announced on April 30th.
Speaker Change: This initiative is designed to enhance near term profitability and create an integrated energy solutions program at our Billerica, Massachusetts facility.
Speaker Change: Part of.
Speaker Change: Our lift truck business.
Speaker Change: This realignment includes three key areas first the development manufacturing and commercialization of lithium ion battery modules charges.
Speaker Change: Battery management systems, and energy management services.
Speaker Change: These products are critical for the lift truck business as next generation lithium ion batteries are expected to increasingly replace lead acid batteries in electric forklift trucks.
Speaker Change: Second the development and commercialization of our mobile modular and scalable hybrid electric charging platform.
Rajiv Prasad: This platform will deliver off-grid power solutions to meet diverse customer needs and will feature a variant called HydroCharge that utilizes Nuvera's proprietary fuel cell technology. Third, a more focused and streamlined fuel cell development program. We're finalizing a higher-powered 125-kilowatt fuel cell for use in port equipment and larger hydrocharge applications. This strategic shift reflects our conclusion that the current fuel cell business will not achieve profitability within an acceptable time frame. largely due to lack of market demand and a changed political environment. The business realignment is expected to deliver direct annualized cost savings of $15 to $20 million, starting in the second half of 2025.
Speaker Change: This platform will deliver off grid power solutions to meet diverse customer needs and will feature a very cold hydro charge that utilizes <unk> proprietary fuel cell technology.
Speaker Change: A more focused and streamlined fuel cell development program. We are finalizing a higher powered 125 kilowatt fuel cell for use in port equipment and larger hydro charge applications.
Speaker Change: This strategic shift reflects our conclusion that the current fuel cell business will not achieve profitability within acceptable time frame.
Speaker Change: Largely due to lack of market demand and it changed political environment.
Speaker Change: Business realignment is expected to deliver direct annualized cost savings of $15 million to $20 million.
Speaker Change: Starting in the second half of 2025. Additionally, we also anticipate an additional $10 million to $15 million.
Rajiv Prasad: Additionally, we also anticipate an additional $10 to $15 million of Nuvera costs to be absorbed by the lift truck business. largely into open positions to accelerate programs on key growth initiatives. As a result of these actions, we expect to incur $15 to $18 million in severance and impairment costs during the second quarter. with the potential for additional charges as we progress. This strategy leverages Nivera's technical expertise to further transform our core lift truck business by Accelerating growth and profitability of our battery and charger programs, launching our mobile charging platform for off-grid power solution, and completion of our port equipment electric power.
Speaker Change: <unk> costs to be absorbed by the lift truck business largely into open positions to accelerate programs on key growth initiatives.
Speaker Change: As a result of these actions, we expect to incur $15 million to $18 million.
Speaker Change: Severance and impairment costs during the second quarter.
Speaker Change: With the potential for additional charges as we progress.
Speaker Change: This strategy Leverages, the various technical expertise to further transform our core lift truck business bye.
Speaker Change: Accelerating growth and profitability of our battery and charger programs launching our mobile charging platform for off grid power solution and completion of our port equipment Electric power solutions.
Rajiv Prasad: We anticipate battery program sales to accelerate in 2025 and continue to expand in subsequent years. Initial hybrid charge sales are expected to, in the second half of 2025, while battery and fuel cell powered port equipment is already undergoing customer testing. This strategic realignment complements Hyster-Yale's broader transformation initiatives aimed at reimagining material handling solutions from port to home. It adds to ongoing programs in modular products. Development, Manufacturing Optimization, and Expanded Customer Solutions. Through these initiatives, we aim to achieve significant revenue and profitability growth in lift truck and Bolzoni businesses, enhancing cash generation and capital returns across the business cycle.
Speaker Change: We anticipate battery program sales to accelerate in 2025 and continued to expand in subsequent years initial hydro charge sales are expected to.
Speaker Change: In the second half of 2025, while battery and fuel cell powered port equipment is already undergoing customer testing.
Speaker Change: This strategic realignment comp.
Speaker Change: Complements high CLS broader.
Speaker Change: Transformation initiatives aimed at re imagining material handling solutions from port to home.
Speaker Change: Add to ongoing programs and modular product.
Speaker Change: Development manufacturing optimization and expanded customer solutions.
Speaker Change: Through these initiatives, we aim to achieve significant revenue and profitability growth in lift truck in both owned businesses enhancing cash generation and capital returns across the business cycle.
Scott Minder: I'll now hand over to Scott to discuss our results, forecasts, and outlook. Thanks, Rajiv, and good morning. As you just heard, we're cautiously optimistic about our 2025 outlook and have great confidence in the actions we're taking to making long-term structural improvements to the company. As you recall, in 2024, we generated the strongest results in company history. At the same time, underlying market demand softened and industry booking rates, along with our backlog, declined substantially across the year. We proactively reduce production rates and maintain our backlog at a lower level, more aligned with our targeted lead. That is a backdrop.
Speaker Change: I will now hand over to Scott to discuss our results forecast and outlook Scott.
Scott Mender: Thanks, Rajiv and good morning, as you just heard we're cautiously optimistic about our 2025 outlook and have great confidence in the actions, we're taking to making long term structural improvements to the company.
Scott Mender: As you recall in 2024, we generated the strongest results in company history.
Scott Mender: At the same time underlying market demand softened and industry booking rates, along with our backlog declined substantially across the year.
Scott Mender: Proactively reduced production rates to maintain our backlog at a lower level more aligned with our targeted lead times.
Scott Mender: That as a backdrop I'll cover our first quarter results, which were inline with expectations for this transitional period.
Scott Minder: I'll cover our first quarter results, which were in line with expectations for this transitional period. In Q1, slip truck revenues declined by 14% year-over-year, primarily due to lower sales volumes in the Americas and in EMEA. This decrease reflects reduced market demand in the latter part of 2024, resulting in lower Q1 2025 production and fewer deliveries. Looking at the lift truck business by region, in the Americas, the downturn was largely driven by reduced sales of higher value Class 4 and 5 internal combustion engine trucks. While in EMEA, the revenue decline was due to lower Class 1 product sales.
Scott Mender: In Q1 lift truck revenues declined by 14% year over year, primarily due to lower sales volumes in the Americas and in EMEA.
Scott Mender: This decrease reflects reduced market demand in the latter part of 2024, resulting in lower Q1, 2025 production and fewer deliveries.
Scott Mender: Looking at the lift truck business by region.
Scott Mender: In the Americas, the downturn was largely driven by reduced sales of higher value class four and five internal combustion engine trucks.
Scott Mender: While in EMEA the revenue decline was due to lower class one product sales.
Scott Minder: On a positive note, JPEC revenues increased year-over-year due to increased volumes and a favorable product mix shift toward big trucks. Sequentially, revenues declined for similar reasons. Lower second half 2024 bookings led to reduced production levels in the first quarter. Lift truck adjusted operating profit declined significantly compared to prior year, primarily due to lower volumes and the resulting loss of manufacturing absorption. Product margins remain solid and above our targets. This was largely due to pricing actions taken to offset material and freight inflation and benefits from our long-term investments in product design and new technology.
Scott Mender: On a positive note Jay pick revenues increased year over year due to increased volumes and a favorable product mix shift towards big trucks.
Scott Mender: Sequentially revenues declined for similar reasons lower second half 2020 for bookings led to reduced production levels in the first quarter.
Scott Mender: Lift truck adjusted operating profit declined significantly compared to prior year, primarily due to lower volumes and the resulting loss of manufacturing absorption.
Scott Mender: Product margins remained solid and above our targets. This was largely due to pricing actions taken to offset material and freight inflation and benefits from our long term investments in product design and new technologies.
Scott Minder: looking at regional profitability. America's reduced class 4 and 5 truck volumes, particularly in the 1 to 3 1⁄2 ton category, created lower manufacturing absorption. In addition, the business saw increased material and freight costs in the quarter. Warranty expenses associated with newly launched products improved from Q4 2024 levels, but remained above rates for well-established prior models. EMEA's first quarter operating loss was driven by significantly lower manufacturing absorption rates caused by reduced production volumes across regional facilities. As Rajiv mentioned, EMEA's first quarter bookings improved. The segment remains committed to delivering stronger results in coming quarters by adapting to fluctuating market dynamics.
Scott Mender: Looking at regional profitability.
Scott Mender: America's reduced class four and five truck volumes, particularly in the 1% to three five ton category created lower manufacturing absorption. In addition, the business saw increased material and freight costs in the quarter.
Scott Mender: Warranty expenses associated with newly launched products improve from Q4, 2024 levels, but remained above rates for well established prior models.
Emea's first quarter operating loss was driven by significantly lower manufacturing absorption rates caused by reduced production volumes across regional facilities.
Speaker Change: As Rajeev mentioned EMEA as first quarter bookings improved.
Speaker Change: This segment remains committed to delivering stronger results in coming quarters by adapting to fluctuating market dynamics.
Scott Minder: Across the business, operating costs rose modestly year over year as we continue to focus on advancing our IT systems and bolstering our customer support infrastructure. These investments are pivotal for enhancing operational efficiency, expediting new product introductions, and expanding our market share. Overall, while the lift truck segment faced significant volume-related hurdles in Q1, ongoing technology and infrastructure investments coupled with efforts to optimize production To strengthen the company's resilience across the business cycle. These measures will play a critical role in navigating future challenges and building a robust foundation for long-term growth.
Speaker Change: Across the business operating costs rose modestly year over year as we continue to focus on advancing our systems and bolstering our customer support infrastructure.
Speaker Change: These investments are pivotal for enhancing operational efficiency, expediting, new product introductions and expanding our market share.
Speaker Change: Overall, while the lift truck segment faced significant volume related hurdles in Q1 ongoing technology and infrastructure investments coupled with efforts to optimize production should strengthen the company's resilience across the business cycle.
Speaker Change: These measures will play a critical role in navigating future challenges and building a robust foundation for long term growth.
Scott Minder: Turning to Balzoni. Revenues declined primarily due to the planned phase-out of lower-margin legacy products. Gross profit margins improved versus prior year due to better pricing and lower material costs. Balzoni's Q1 operating expenses were below prior year levels due to strong cost management efforts. Adjusted operating profits declined compared to prior year largely as a result of lower volume. Sequentially, Bolzoni's adjusted operating profit increased due to improved product margins and cost.
Baldoni: Turning to baldoni.
Baldoni: Revenues declined primarily due to the planned phase out of lower margin legacy products gross profit margins improved versus prior year due to better pricing and lower material costs.
Baldoni: <unk> Q1 operating expenses were below prior year levels due to strong cost management efforts.
Baldoni: Adjusted operating profits declined compared to prior year, largely as a result of lower volumes.
Baldoni: Sequentially <unk> adjusted operating profit increased due to improved product margins and cost management.
Scott Minder: Nuvera's operating loss increased both year-over-year and sequentially, largely driven by higher research and development expenses. Additionally, lower U.S. Department of Defense funding in Q1 2025 negatively impacted the prior period comparison. A portion of these elevated costs were offset by savings realized from headcount reduction initiatives implemented in 2024.
Baldoni: <unk> operating loss increased both year over year and sequentially, largely driven by higher research and development expenses. Additionally.
Baldoni: Additionally, lower U S Department of defense funding in Q1, 2025 negatively impacted the prior period comparisons.
Baldoni: A portion of these elevated costs were offset by savings realized from headcount reduction initiatives implemented in 2024.
Scott Minder: Next, I'll cover the company's tax Q1 2025 income tax expense of $8 million was significantly below the prior year's $25 million due to lower pre-tax earnings. T1's effective tax rate increased because of the ongoing capitalization of research and development costs for U.S. tax purposes, combined with ramifications from the company's U.S. valuation allowance position.
Baldoni: Next I'll cover the company's tax position.
Baldoni: Q1, 2025 income tax expense of $8 million was significantly below the prior year's $25 million.
Due to lower pre tax earnings.
Baldoni: Q1 effective tax rate increased because of the ongoing capitalization of research and development costs for U S tax purposes, combined with ramifications from the company's U S valuation allowance position.
Scott Minder: Now I'll turn to cash and liquidity. Our company remains focused on continued strengthening of its balance sheet and maintaining financial discipline. Leverage, as measured by net debt to EBITDA, was 1.6 times at the end of Q1.
Baldoni: Now I'll turn to cash and liquidity.
Baldoni: Our company remains focused on continued strengthening of its balance sheet and maintaining financial discipline.
Baldoni: Leverage as measured by net debt to EBITDA was one six times at the end of Q1.
Scott Minder: Proactive liquidity management, as our financial results reflect slowing market demand, demonstrates improved financial resilience and challenging market conditions. During the first quarter, operating cash outflows totaled $36 million. This compares to inflows of $22 million in the prior year, with the difference driven by lower net income and unfavorable working capital changes. We're committed to improving working capital efficiency, particularly through inventory management. In January 2025, we implemented a six-week firm production schedule designed to optimize inventory control. As a result, Q1 inventory levels decreased by nearly $70 million compared to prior year, demonstrating better alignment between production requirements and on-hand materials.
Baldoni: Proactive liquidity management as our financial results reflects slowing market demand demonstrates improved financial resilience and challenging market conditions.
Baldoni: During the first quarter operating cash outflows totaled $36 million.
Baldoni: This compares to inflows of $22 million in the prior year with.
Baldoni: With the difference driven by lower net income and unfavorable working capital changes.
Baldoni: We're committed to improving working capital efficiency, particularly through inventory management.
Baldoni: In January 2025, we implemented a six week firm production schedule designed to optimize inventory control.
Baldoni: As a result, Q1 inventory levels decreased by nearly $70 million compared to prior year, demonstrating better alignment between production requirements and on and materials.
Scott Minder: By this improvement, working capital as a percent of sales rose to 22% due to lower revenue.
Baldoni: This improvement working capital as a percent of sales rose to 22% due to lower revenues.
Scott Minder: Now I'll cover our outlook for Q2 in full year 2025. First, due to the high level of macroeconomic volatility, I want to clearly lay out our key forecast assumptions. First, we include all tariffs in effect on April 9th in our baseline. Second, we assume no reinstatement of April 9th tariffs currently paused for 90 days. Third, our current Section 301 tariff exemption related to lift truck parts will not be extended beyond May 31st, 2025. Next, we forecast no additional tariffs globally in 2025. Our demand projections are grounded in bookings, backlog, and market trends. We assume no demand decline due to a U.S.
Baldoni: Now I'll cover our outlook for Q2 and full year 2025.
Baldoni: First due to the high level of macroeconomic volatility and went to clearly lay out our key forecast assumptions.
Baldoni: First we include all tariffs in effect on April 9th in our baseline.
Baldoni: Second we assume no reinstatement of April 9th tariffs currently paused for 90 days.
Baldoni: Third our current section 301 tariff exemption related to lift truck parts will not be extended beyond may 31 2025.
Baldoni: Next we forecast no additional tariffs globally in 2025.
Baldoni: Our demand projections are grounded in bookings backlog and market trends, we assume no demand decline due to a U S or global economic recession.
Scott Minder: or global economic recession. And finally, we model a successful implementation of the company's proactive pricing, supply chain, and cost optimization initiatives discussed in our material.
Baldoni: And finally, we model a successful implementation of the company's proactive pricing supply chain and cost optimization initiatives discussed in our materials.
Scott Minder: With that out of the way, let's talk about the market details and what we see in the quarters ahead. In Q1, we recorded bookings of $590 million, reflecting year-over-year growth and a nearly 50% sequential increase. This improvement was largely due to elevated demand for higher-priced Class 4 and 5 products, including our modular and scalable lift trucks. Our book-to-bill ratio stood at 100%, reflecting early signs of a potential market demand turnaround. Continued 2025 bookings market recovery will position us for accelerated growth in 2026. We remain mindful of global trade policies and how those could negatively impact our current projections.
Baldoni: With that out of the way, let's talk about the market details and what we see in the quarters ahead.
Baldoni: In Q1, we recorded bookings of $590 million, reflecting year over year growth and a nearly 50% sequential increase this improvement was largely due to elevated demand for higher priced class four and five products, including our modular and scalable lift trucks.
Baldoni: Our book to Bill ratio stood at 100%, reflecting early signs of a potential market demand turnaround.
Baldoni: A continued 2025 bookings market recovery will position us for accelerated growth in 2026.
Baldoni: We remain mindful of global trade policies, and how those could negatively impact our current projections.
Scott Minder: as a result of increased bookings and moderated production. Our $1.9 billion backlog remains solid. Looking forward, production rates are projected to increase somewhat in Q2 with full-year revenues expected to slightly exceed annualized Q1 levels. We'll remain flexible, ready to adjust production rates should market conditions or booking levels shift later in the year.
Baldoni: As a result of increased bookings and moderated production levels are $1 $9 billion backlog remains solid looking.
Baldoni: Looking forward production rates are projected to increase somewhat in Q2 with full year revenue is expected to slightly exceed annualized Q1 levels. We will remain flexible ready to adjust production rates should market conditions, our booking levels shift later in the year.
Scott Minder: To preserve product margins, we've implemented disciplined pricing strategies and expanded our portfolio with innovative models. While competitive pressures may lead to a modest margin decline, price actions taken in Q1 will help to counter inflation and tariff-related costs.
Baldoni: To preserve product margins, we've implemented disciplined pricing strategies and expanded our portfolio with innovative models.
Baldoni: While competitive pressures may lead to a modest margin declined price actions taken in Q1 will help to counter inflation and tariff related costs.
Scott Minder: To further build resilience into our business, we're taking several actions to strengthen our competitive position and deliver more consistent financial results across the business cycle. First, our Manufacturing Footprint Optimization Project, initiated in 2024 to streamline our production footprint, is progressing as planned. Second, the Nubera Business Realignment Program outlined by Rajiv is expected to accelerate profitable growth and significantly reduce expenses. We're also expanding sales capacity, upgrading IT systems, and leveraging lower-cost shared services to offset rising operating expenses. These efforts will significantly improve our long-term financial trends, producing benefits in the second half of 2025 and increasing over time.
Baldoni: To further build resilience into our business, we're taking several actions to strengthen our competitive position and deliver more consistent financial results across the business cycle.
Baldoni: First our manufacturing footprint optimization project initiated in 2024 to streamline our production footprint is progressing as planned.
Rajiv Prasad: The new <unk> business realignment program outlined by Rajiv is expected to accelerate profitable growth and significantly reduce expenses.
Rajiv Prasad: We're also expanding sales capacity upgrading our it systems and leveraging lower cost shared services to offset rising operating expenses.
Rajiv Prasad: These efforts will significantly improve our long term financial trends producing benefits in the second half of 2025 and increasing over time.
Scott Minder: While improved Q1 bookings support increased Q2 production and revenues, lift truck second quarter operating profit is expected to decline moderately versus Q1. This is largely due to the timing of tariff-related cost increases and the actions taken to mitigate their impact. For the full year 2025, operating profit is expected to be below 2024's exceptionally strong results.
Rajiv Prasad: While improved Q1 bookings support increased Q2 production and revenues lift trucks second quarter operating profit is expected to decline moderately versus Q1.
Rajiv Prasad: This is largely due to the timing of tariff related cost increases and the actions taken to mitigate their impact.
Rajiv Prasad: For the full year 2025 operating profit is expected to be below 2024 is exceptionally strong results now.
Scott Minder: Now let's turn to Bolzoni's Outlook. For the second quarter, we anticipate a modest sequential revenue improvement with stronger attachment sales offsetting lower legacy component sales. Operating profit is also projected to increase moderately due to a favorable product mix and disciplined cost control.
Rajiv Prasad: Now, let's turn to <unk> outlook for.
Rajiv Prasad: For the second quarter, we anticipate a modest sequential revenue improvement was stronger attachment sales offsetting lower legacy components sales operating profit is also projected to increase moderately due to a favorable product mix and disciplined cost control.
Scott Minder: Looking at full year 2025, revenues are forecasted to decline year over year, primarily due to lower legacy product sales and weaker demand across Balzoni's customer base. While we expect the improved product mix to provide benefits, it is unlikely to fully offset lower volume. As a result, Balzoni's 2025 operating profit is projected to fall below 2024 levels, partly mitigated by strong cost control.
Rajiv Prasad: Looking at full year 2025 revenues are forecasted to decline year over year, primarily due to lower legacy product sales and weaker demand across both of these customer base.
Rajiv Prasad: While we expect the improved product mix to provide benefits it is unlikely to fully offset lower volumes.
Rajiv Prasad: As a result, <unk> 2025 operating profit is projected to fall below 2024 levels, partly mitigated by strong cost control.
Scott Minder: I'll conclude our outlook with a consolidated Consistent with our prior guidance, we expect full-year 2025 revenues, production levels, and profits to fall below our strong 2024 results. Although full year 2025 revenue is projected to decline year over year, we're encouraged by the sequential improvement expected in Q2. However, we anticipate consolidated operating profit to decline moderately versus Q1, largely due to the timing of tariff-related cost increases and the actions taken to mitigate their impact. Tariff levels and global trade uncertainty remain key factors that could impact our results. We're closely monitoring these external dynamics and preparing actions for a variety of potential outcomes.
Rajiv Prasad: I will conclude our outlook with the consolidated view.
Rajiv Prasad: Consistent with our prior guidance, we expect full year 2025 revenues production levels and profit to fall below our strong 2024 results.
Rajiv Prasad: Although full year 2025 revenue is projected to decline year over year, we're encouraged by the sequential improvement expected in Q2.
Rajiv Prasad: However, we anticipate consolidated operating profit to decline moderately versus Q1, largely due to the timing of tariff related cost increases and the actions taken to mitigate their impact.
Rajiv Prasad: Tariff levels and global trade uncertainty remain key factors that could impact our results.
Rajiv Prasad: We're closely monitoring these external dynamics and preparing actions for a variety of potential outcomes are financial.
Scott Minder: Our financial discipline, established over several years, is delivering stronger and more consistent results across economic cycles. This approach remains central to our operations, enabling our 7% operating profit margin target throughout the business cycle. During periods of backlog-driven strength, such as those experienced in early 2024, we aim to exceed the 7% target. However, in cyclically lower lift truck market demand phases, we expect profitability to remain intact, but be below the 7% level. This ability to sustain profits amid fluctuating demand marks a significant performance improvement compared to prior cycles.
Rajiv Prasad: Disciplined established over several years is delivering stronger and more consistent results across economic cycles.
Rajiv Prasad: This approach remains central to our operations, enabling our 7% operating profit margin target throughout the business cycle.
Rajiv Prasad: During periods of backlog driven strength such as those experienced in early 2024, we aim to exceed the 7% target. However.
Rajiv Prasad: However, in cyclically lower lift truck market demand phases, we expect profitability to remain intact, but be below the 7% level.
Rajiv Prasad: This ability to sustained profits amidst fluctuating demand marks a significant performance improvement compared to prior cycles.
Scott Minder: Turning to cash flow, we continue to emphasize strong operating cash generation and accretive capital deployment. For 2025, we anticipate cash flows from operations to be only moderately below 2024 levels, despite the projected net income decline. This relative stability is supported by ongoing efforts to enhance working capital efficiency. to align production and working capital processes with anticipated market conditions for executing key inventory reduction initiatives. These efforts are pivotal to driving substantial progress in 2025 and ensuring operational cash flow aligns with our long-term cash conversion objective.
Rajiv Prasad: Turning to cash flow, we continue to emphasize strong operating cash generation and accretive capital deployment.
Rajiv Prasad: For 2025, we anticipate cash flows from operations to be only moderately below 2024 levels. Despite the projected net income decline. This relative stability is supported by ongoing efforts to enhance working capital efficiency.
Rajiv Prasad: To align production and working capital processes with anticipated market conditions for executing key inventory reduction initiatives. These efforts are pivotal to driving substantial progress in 2025, and ensuring operational cash flow aligns with our long term cash conversion objectives.
Scott Minder: Regarding capital expenditures, we forecast 2025 spending in the range of $40 to $65 million below our prior range of $40 to $80 million. This reduction reflects a disciplined approach to investment prioritization given increased global economic uncertainty. We'll closely monitor marketing conditions and we'll adjust our capital investment levels and timing based on evolving visibility. As we continue to generate cash, our disciplined capital allocation framework remains unchanged. Reducing leverage, investing strategically to support profitable growth, and delivering sustainable value and returns for our shareholders remain our key priorities.
Rajiv Prasad: Regarding capital expenditures, we forecast 2025 spending in the range of $40 million to $65 million below our prior range of $40 million to $80 million.
Rajiv Prasad: This reduction reflects a disciplined approach to investment prioritization given increased global economic uncertainty will closely monitor market conditions and will adjust our capital investment levels and timing based on evolving visibility.
Rajiv Prasad: As we continue to generate cash our disciplined capital allocation framework remains unchanged, reducing leverage investing strategically to support profitable growth and delivering sustainable value and returns for our shareholders remain our key priorities.
Scott Minder: We expect 2025 to be a more challenging year, particularly when compared to 2024's exceptional performance. We're confident in our ability to adapt and strengthen our foundation for future growth. Our focus remains on creating higher highs and higher lows across the business cycle. Maximizing operational results during market upswings and sustaining profitability in cash generation during softer periods.
Rajiv Prasad: We expect 2025 to be a more challenging year, particularly when compared to 2020 for his exceptional performance.
We're confident in our ability to adapt and strengthen our foundation for future growth.
Rajiv Prasad: Our focus remains on creating higher highs and higher lows across the business cycle.
Rajiv Prasad: Maximizing operational results during market upswings, and sustaining profitability and cash generation during the softer periods.
Alfred Rankin: Now, I'll turn the call over to Al for his... The updates. provided by Rajiv and Scott today are particularly important.
Speaker Change: Now I'll turn the call over to al for his comments.
Al Rankin: The updates.
Speaker Change: Provided by Rajiv and Scott today are particularly important.
Alfred Rankin: Tariffs remain a large and important concern, and the restructuring of our Billerica facility around energy solutions and away from fuel cells is key in today's market environment. Our Hyster-Yale vision, however, remains the same. revolutionize the way materials move from port to home. This vision is built on a mission with two core promises, delivering optimal solutions to our customers and providing exceptional customer To achieve this, our focus remains on executing key strategic projects. that will transform our core counterbalance truck business while expanding into related high-growth and profit areas such as warehouse lift trucks, vehicle automation, energy solutions, and attachments.
Speaker Change: Tariffs remain a large and important concern and the restructuring of our billerica facility around energy solutions and away from fuel cells is key in today's market environment.
Speaker Change: Our history.
Speaker Change: Vision, however remains the same.
Speaker Change: Revolutionized the way materials move from port to home.
Speaker Change: This vision is built on a mission with two core promises delivering optimal solutions to our customers and providing exceptional customer care.
Speaker Change: To achieve this our focus remains on executing key strategic projects.
Speaker Change: That will transform our core counterbalanced truck business, while expanding into related high growth and profit areas such as warehouse lift trucks vehicle automation energy solutions and attachments.
Alfred Rankin: These complementary growth and profit improvement efforts are designed to strengthen our competitive position, drive long-term revenue growth and operating profit, and position Hyster-Yale ahead of materials handling market trends.
Speaker Change: These complementary growth and profit improvement efforts are designed to strengthen our competitive position drive long term revenue growth and operating profit.
Speaker Change: And positioning the hyster Yale ahead of materials handling market trends.
Alfred Rankin: Over time, we believe these key projects will create sustainable competitive advantage for Hyster-Yale businesses to the benefit both of our customers and our shareholders.
Speaker Change: Over time, we believe these key projects will create sustainable competitive advantage for <unk> businesses to the benefit both of our customers and our shareholders.
Alfred Rankin: And now, let's turn to questions. Thank you.
Speaker Change: And now let's turn to questions.
Speaker Change: Thank you.
Operator: Ladies and gentlemen, we'll now begin the question and answer session.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. So do you have a question. Please press the star followed by the one on your Touchstone from <unk>. The your hand has been raised CD rates to decline through the calling process. Please press star followed by the Q. If you are using a speaker phone please with the incentive fee for pricing.
Operator: Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised.
Operator: Should you wish to decline from the polling process, please press the star followed by the two.
Operator: If you are using a speakerphone, please lift the handset before pressing any keys. And I'll just be a moment to see if questions do pop up. So at this time, there are no questions.
Speaker Change: Okay.
Speaker Change: And you see a moment Steve question Keith.
Andrew Weber: No at this time there are no questions I will now turn the call over to Andrew <unk>. Please go ahead.
Andrea Sejba: I will now turn the call over to Andrea. Please go ahead. Well, thank you for participation and listening to our earnings call today. A replay of our call will be available online later today. We'll post a transcript on the Hyster-Yale website when it becomes available. If you have any questions, please reach out to me. My information is on the press release. And I hope you enjoy the rest of your day.
Andrew Weber: Well, thank you for participation and listening to our earnings.
Andrew Weber: Earnings call today, a replay of our call will be available online later today, we'll post a transcript on the hyster Yale website when it becomes available.
Andrew Weber: If you have any questions. Please reach out to me my information is on the press release and I Hope you enjoy the rest of your day.
Operator: Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation, and as they please disconnect. Have a great day.
Speaker Change: Ladies and gentlemen, this does conclude your conference call for today. Thank you very much for your participation and Anthony please disconnect.
Andrew Weber: Dan.
Andrew Weber: [music].
Andrew Weber: Okay.
Andrew Weber: Okay.
Andrew Weber: Yes.
Andrew Weber: Okay.
Andrew Weber: Okay.
Andrew Weber: Yes.
Andrew Weber: Okay.
Andrew Weber: Yes.
Andrew Weber: Okay.