Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Millions, Except Per Share and Percentage Data)
Hyster-Yale Materials Handling, Inc. ("Hyster-Yale" or the "Company") and its subsidiaries, including its operating company Hyster-Yale Group, Inc. ("HYG"), is a leading, globally integrated, full-line lift truck manufacturer. The Company offers a broad array of solutions aimed at meeting the specific materials handling needs of its customers, including attachments and hydrogen fuel cell power products, telematics, automation and fleet management services, as well as a variety of other power options for its lift trucks. The Company, through HYG, designs, engineers, manufactures, sells and services a comprehensive line of lift trucks, attachments and aftermarket parts marketed globally primarily under the Hyster
®
and Yale
®
brand names, mainly to independent Hyster
®
and Yale
®
retail dealerships. The materials handling business historically has been cyclical because the rate of orders for lift trucks fluctuates depending on the general level of economic activity in the various industries and countries its customers serve. Lift trucks and component parts are manufactured in the United States, China, Northern Ireland, Mexico, the Netherlands, the Philippines, Italy, Vietnam, Japan and Brazil.
The Company owns a
75%
majority interest in Hyster-Yale Maximal Forklift (Zhejiang) Co., Ltd. ("Hyster-Yale Maximal"). Hyster-Yale Maximal is a Chinese manufacturer of utility and standard lift trucks and specialized material handling equipment. Hyster-Yale Maximal also designs and produces specialized products in the port equipment and rough terrain forklift markets. The results of Hyster-Yale Maximal are included in the JAPIC segment since the date of acquisition.
The Company operates Bolzoni S.p.A. ("Bolzoni"). Bolzoni is a leading worldwide producer and distributor of attachments, forks and lift tables marketed under the Bolzoni Auramo
®
and Meyer
®
brand names. Bolzoni products are manufactured in the United States, Italy, China, Germany and Finland. Through the design, production and distribution of a wide range of attachments, Bolzoni has a strong presence in the market niche of lift-truck attachments and industrial material handling.
In 2018, the Company announced, as part of a plan to expand Bolzoni's capabilities in the United States, Bolzoni's North America attachment manufacturing would be moved into HYG's Sulligent, Alabama manufacturing facility over the course of 2019. As a result, effective January 1, 2019, the Sulligent facility became a Bolzoni facility. Accordingly, the results of the Sulligent facility for the first six months of 2019 have been included in the Bolzoni segment. In addition, the Company reclassified the historical results of operations of the Sulligent facility for 2018 in this Quarterly Report on Form 10-Q.
The Company operates Nuvera Fuel Cells, LLC ("Nuvera"). Nuvera is an alternative-power technology company focused on hydrogen fuel cell stacks and engines.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Please refer to the discussion of Critical Accounting Policies and Estimates as disclosed on pages 14 through 16 in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. Critical Accounting Policies and Estimates have not materially changed since December 31, 2018. See Note 2 and Note 4 to the unaudited condensed consolidated financial statements for a discussion of the new accounting pronouncements adopted on January 1, 2019.
FINANCIAL REVIEW
The results of operations for the Company were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
Favorable / (Unfavorable)
|
|
SIX MONTHS ENDED
|
|
Favorable / (Unfavorable)
|
|
JUNE 30
|
|
|
JUNE 30
|
|
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
Lift truck unit shipments (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
14.5
|
|
|
14.1
|
|
|
2.8
|
%
|
|
29.7
|
|
|
29.7
|
|
|
—
|
%
|
EMEA
|
8.0
|
|
|
7.4
|
|
|
8.1
|
%
|
|
15.6
|
|
|
14.9
|
|
|
4.7
|
%
|
JAPIC
(1)
|
3.8
|
|
|
2.4
|
|
|
58.3
|
%
|
|
6.7
|
|
|
4.1
|
|
|
63.4
|
%
|
|
26.3
|
|
|
23.9
|
|
|
10.0
|
%
|
|
52.0
|
|
|
48.7
|
|
|
6.8
|
%
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$
|
537.7
|
|
|
$
|
471.6
|
|
|
14.0
|
%
|
|
$
|
1,072.2
|
|
|
$
|
967.5
|
|
|
10.8
|
%
|
EMEA
|
202.1
|
|
|
191.0
|
|
|
5.8
|
%
|
|
392.2
|
|
|
388.9
|
|
|
0.8
|
%
|
JAPIC
(1)
|
72.9
|
|
|
57.5
|
|
|
26.8
|
%
|
|
136.3
|
|
|
107.0
|
|
|
27.4
|
%
|
Lift truck business
|
812.7
|
|
|
720.1
|
|
|
12.9
|
%
|
|
1,600.7
|
|
|
1,463.4
|
|
|
9.4
|
%
|
Bolzoni
|
90.8
|
|
|
88.0
|
|
|
3.2
|
%
|
|
182.6
|
|
|
177.5
|
|
|
2.9
|
%
|
Nuvera
|
2.2
|
|
|
0.7
|
|
|
n.m.
|
|
|
6.7
|
|
|
1.3
|
|
|
n.m.
|
|
Eliminations
|
(49.5
|
)
|
|
(42.9
|
)
|
|
n.m.
|
|
|
(99.0
|
)
|
|
(87.8
|
)
|
|
n.m.
|
|
|
$
|
856.2
|
|
|
$
|
765.9
|
|
|
11.8
|
%
|
|
$
|
1,691.0
|
|
|
$
|
1,554.4
|
|
|
8.8
|
%
|
Gross profit (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$
|
90.1
|
|
|
$
|
79.1
|
|
|
13.9
|
%
|
|
$
|
171.5
|
|
|
$
|
164.9
|
|
|
4.0
|
%
|
EMEA
|
28.4
|
|
|
25.1
|
|
|
13.1
|
%
|
|
53.5
|
|
|
50.9
|
|
|
5.1
|
%
|
JAPIC
(1)
|
8.4
|
|
|
6.1
|
|
|
37.7
|
%
|
|
14.5
|
|
|
10.6
|
|
|
36.8
|
%
|
Lift truck business
|
126.9
|
|
|
110.3
|
|
|
15.0
|
%
|
|
239.5
|
|
|
226.4
|
|
|
5.8
|
%
|
Bolzoni
|
15.5
|
|
|
16.8
|
|
|
(7.7
|
)%
|
|
31.1
|
|
|
33.8
|
|
|
(8.0
|
)%
|
Nuvera
|
(2.7
|
)
|
|
(1.6
|
)
|
|
n.m.
|
|
|
(4.5
|
)
|
|
(2.5
|
)
|
|
n.m.
|
|
Eliminations
|
(0.3
|
)
|
|
(0.2
|
)
|
|
n.m.
|
|
|
(0.5
|
)
|
|
(0.3
|
)
|
|
n.m.
|
|
|
$
|
139.4
|
|
|
$
|
125.3
|
|
|
11.3
|
%
|
|
$
|
265.6
|
|
|
$
|
257.4
|
|
|
3.2
|
%
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$
|
63.9
|
|
|
$
|
61.1
|
|
|
(4.6
|
)%
|
|
$
|
130.0
|
|
|
$
|
119.0
|
|
|
(9.2
|
)%
|
EMEA
|
23.7
|
|
|
23.7
|
|
|
—
|
%
|
|
48.8
|
|
|
48.6
|
|
|
(0.4
|
)%
|
JAPIC
(1)
|
10.2
|
|
|
8.2
|
|
|
(24.4
|
)%
|
|
20.8
|
|
|
14.9
|
|
|
(39.6
|
)%
|
Lift truck business
|
97.8
|
|
|
93.0
|
|
|
(5.2
|
)%
|
|
199.6
|
|
|
182.5
|
|
|
(9.4
|
)%
|
Bolzoni
|
13.2
|
|
|
13.6
|
|
|
2.9
|
%
|
|
27.6
|
|
|
27.9
|
|
|
1.1
|
%
|
Nuvera
|
5.5
|
|
|
7.9
|
|
|
30.4
|
%
|
|
12.1
|
|
|
17.0
|
|
|
28.8
|
%
|
|
$
|
116.5
|
|
|
$
|
114.5
|
|
|
(1.7
|
)%
|
|
$
|
239.3
|
|
|
$
|
227.4
|
|
|
(5.2
|
)%
|
Operating profit (loss)
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$
|
26.2
|
|
|
$
|
18.0
|
|
|
45.6
|
%
|
|
$
|
41.5
|
|
|
$
|
45.9
|
|
|
(9.6
|
)%
|
EMEA
|
4.7
|
|
|
1.4
|
|
|
n.m.
|
|
|
4.7
|
|
|
2.3
|
|
|
104.3
|
%
|
JAPIC
(1)
|
(1.8
|
)
|
|
(2.1
|
)
|
|
n.m.
|
|
|
(6.3
|
)
|
|
(4.3
|
)
|
|
(46.5
|
)%
|
Lift truck business
|
29.1
|
|
|
17.3
|
|
|
68.2
|
%
|
|
39.9
|
|
|
43.9
|
|
|
(9.1
|
)%
|
Bolzoni
|
2.3
|
|
|
3.2
|
|
|
(28.1
|
)%
|
|
3.5
|
|
|
5.9
|
|
|
(40.7
|
)%
|
Nuvera
|
(8.2
|
)
|
|
(9.5
|
)
|
|
13.7
|
%
|
|
(16.6
|
)
|
|
(19.5
|
)
|
|
14.9
|
%
|
Eliminations
|
(0.3
|
)
|
|
(0.2
|
)
|
|
n.m.
|
|
|
(0.5
|
)
|
|
(0.3
|
)
|
|
n.m.
|
|
|
$
|
22.9
|
|
|
$
|
10.8
|
|
|
112.0
|
%
|
|
$
|
26.3
|
|
|
$
|
30.0
|
|
|
(12.3
|
)%
|
Interest expense
|
$
|
5.1
|
|
|
$
|
4.0
|
|
|
(27.5
|
)%
|
|
$
|
9.6
|
|
|
$
|
8.0
|
|
|
(20.0
|
)%
|
Other income
|
$
|
(3.5
|
)
|
|
$
|
(2.7
|
)
|
|
29.6
|
%
|
|
$
|
(9.3
|
)
|
|
$
|
(7.3
|
)
|
|
27.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
Favorable / (Unfavorable)
|
|
SIX MONTHS ENDED
|
|
Favorable / (Unfavorable)
|
|
JUNE 30
|
|
|
JUNE 30
|
|
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
Net income (loss) attributable to stockholders
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$
|
17.7
|
|
|
$
|
10.2
|
|
|
73.5
|
%
|
|
$
|
29.8
|
|
|
$
|
30.6
|
|
|
(2.6
|
)%
|
EMEA
|
4.1
|
|
|
1.3
|
|
|
n.m.
|
|
|
4.0
|
|
|
2.3
|
|
|
73.9
|
%
|
JAPIC
(1)
|
(1.5
|
)
|
|
(0.5
|
)
|
|
n.m.
|
|
|
(3.9
|
)
|
|
(1.2
|
)
|
|
(225.0
|
)%
|
Lift truck business
|
20.3
|
|
|
11.0
|
|
|
84.5
|
%
|
|
29.9
|
|
|
31.7
|
|
|
(5.7
|
)%
|
Bolzoni
|
1.6
|
|
|
2.1
|
|
|
(23.8
|
)%
|
|
1.9
|
|
|
4.0
|
|
|
(52.5
|
)%
|
Nuvera
|
(6.0
|
)
|
|
(6.9
|
)
|
|
13.0
|
%
|
|
(12.1
|
)
|
|
(14.2
|
)
|
|
14.8
|
%
|
Eliminations
|
0.3
|
|
|
(0.6
|
)
|
|
n.m.
|
|
|
(0.1
|
)
|
|
(1.0
|
)
|
|
n.m.
|
|
|
$
|
16.2
|
|
|
$
|
5.6
|
|
|
189.3
|
%
|
|
$
|
19.6
|
|
|
$
|
20.5
|
|
|
(4.4
|
)%
|
Diluted earnings per share
|
$
|
0.97
|
|
|
$
|
0.34
|
|
|
185.3
|
%
|
|
$
|
1.17
|
|
|
$
|
1.24
|
|
|
(5.6
|
)%
|
Reported income tax rate
|
20.7
|
%
|
|
40.0
|
%
|
|
|
|
22.7
|
%
|
|
29.7
|
%
|
|
|
(1)
Hyster-Yale Maximal was acquired on June 1, 2018 and results of operations have been included since the acquisition date.
|
Following is the detail of the Company's unit shipments, bookings and backlog of unfilled orders placed with its manufacturing and assembly operations for new lift trucks, reflected in thousands of units. As of
June 30, 2019
, substantially all of the Company's backlog is expected to be sold within the next twelve months.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
SIX MONTHS ENDED
|
|
|
JUNE 30
|
|
JUNE 30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Unit backlog, beginning of period
|
|
40.2
|
|
|
36.1
|
|
|
43.9
|
|
|
33.8
|
|
Unit shipments
|
|
(26.3
|
)
|
|
(23.9
|
)
|
|
(52.0
|
)
|
|
(48.7
|
)
|
Unit bookings
|
|
30.2
|
|
|
29.5
|
|
|
52.2
|
|
|
56.6
|
|
Unit backlog, end of period
|
|
44.1
|
|
|
41.7
|
|
|
44.1
|
|
|
41.7
|
|
The following is the detail of the approximate sales value of the Company's lift truck unit bookings and backlog, reflected in millions of dollars. The dollar value of bookings and backlog is calculated using the current unit bookings and backlog and the forecasted average sales price per unit.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
SIX MONTHS ENDED
|
|
|
JUNE 30
|
|
JUNE 30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Bookings, approximate sales value
|
|
$
|
620
|
|
|
$
|
720
|
|
|
$
|
1,150
|
|
|
$
|
1,340
|
|
Backlog, approximate sales value
|
|
$
|
1,130
|
|
|
$
|
1,080
|
|
|
$
|
1,130
|
|
|
$
|
1,080
|
|
Second
Quarter of
2019
Compared with
Second
Quarter of
2018
The following table identifies the components of change in revenues for the
second
quarter of
2019
compared with the
second
quarter of
2018
:
|
|
|
|
|
|
Revenues
|
2018
|
$
|
765.9
|
|
Increase (decrease) in 2019 from:
|
|
Unit volume and product mix
|
50.5
|
|
Price
|
27.8
|
|
Hyster-Yale Maximal revenues
|
16.3
|
|
Other
|
7.3
|
|
Bolzoni revenues
|
2.8
|
|
Parts
|
2.7
|
|
Nuvera revenues
|
1.5
|
|
Foreign currency
|
(18.6
|
)
|
2019
|
$
|
856.2
|
|
Revenues increased 11.8% to
$856.2 million
in the
second
quarter of
2019
from
$765.9 million
in the
second
quarter of
2018
. The increase was mainly due to improved unit volume and product mix and pricing to offset material cost increases and tariffs, partially offset by unfavorable currency movements from the translation of sales into U.S. dollars. In addition, the acquisition of Hyster-Yale Maximal and increased Bolzoni and Nuvera revenues contributed to the improvement in revenues.
Revenues in the Americas increased primarily as a result of higher unit volume and product mix, parts volumes and improved pricing. Unit shipments increased primarily in Brazil, as the market continued to strengthen. The Americas also had increased revenues of higher-capacity Class 4 trucks, Class 2 electric, warehouse trucks, Class 1 electric, counterbalanced trucks and Class 5 Big trucks. In addition, higher pricing put in place to offset material cost increases and tariffs was realized in the second quarter of 2019. These increases were partially offset by lower revenues from lower-capacity Class 5 trucks, primarily as a result of a continued shortage of component parts from certain key suppliers.
EMEA's revenues increased mainly as a result of higher shipments of higher-priced lift trucks, partially offset by unfavorable currency movements of $14.1 million from the translation of sales into U.S. dollars.
Revenues in JAPIC increased primarily as a result of the acquisition of Hyster-Yale Maximal, partially offset by $2.6 million of unfavorable currency movements.
The increase in Bolzoni's revenues was mainly due to higher volume, partially offset by unfavorable currency movements of $3.4 million from the translation of sales into U.S. dollars.
Nuvera's revenues increased as a result of development funding received associated with third-party development agreements.
The following table identifies the components of change in operating profit for the
second
quarter of
2019
compared with the
second
quarter of
2018
:
|
|
|
|
|
|
Operating Profit
|
2018
|
$
|
10.8
|
|
Increase (decrease) in 2019 from:
|
|
Lift truck gross profit
|
16.5
|
|
Nuvera operations
|
1.3
|
|
Bolzoni operations
|
(0.9
|
)
|
Lift truck selling, general and administrative expenses
|
(4.8
|
)
|
2019
|
$
|
22.9
|
|
The Company recognized operating profit of
$22.9 million
in the
second
quarter of
2019
compared with
$10.8 million
in the
second
quarter of
2018
. The increase in operating profit was mainly due to improved gross profit in the lift truck business partially offset by higher selling, general and administrative expenses. Gross profit increased primarily from the favorable
impact of price increases implemented in 2018 to offset higher material cost and aluminum and steel tariffs, partially offset by higher material costs and unfavorable currency movements. Selling, general and administrative expense increased primarily as a result of higher product development costs to support the Company's strategic initiatives partially offset by favorable employee-related expenses.
Operating profit in the Americas increased in the second quarter of 2019 compared with the second quarter of 2018 primarily as a result of improved gross profit partially offset by higher selling, general and administrative expenses. Gross profit increased primarily from the favorable impact of price increases implemented in 2018 to offset higher material cost and aluminum and steel tariffs, $4.9 million of favorable retroactive tariff exclusion adjustments for certain components imported from China, which includes $3.1 million of refunds for tariffs incurred prior to the second quarter of 2019, and higher unit and parts volume. These increases were partially offset by higher material and freight costs, a shift in mix to lower-margin products and unfavorable currency movements. Selling, general and administrative expense increased primarily as a result of additional investments in the expansion of the Company's industry-focused sales and marketing teams and increased product development costs to support a planned major upgrade to the Company's core product platforms. These increases were partially offset by lower employee-related costs and the absence of $1.9 million of Maximal acquisition-related costs incurred in the second quarter of 2018.
EMEA's operating profit increased in the second quarter of 2019 compared with the second quarter of 2018 primarily as result of increased unit sales, improved manufacturing efficiencies resulting from higher unit sales and price increases, partially offset by higher material costs.
JAPIC's operating loss in the second quarter of 2019 decreased compared with the second quarter of 2018 primarily due to the acquisition of Hyster-Yale Maximal.
Bolzoni's operating profit decreased mainly as a result of $0.6 million of restructuring costs recognized in the second quarter of 2019 related to the transfer of Bolzoni's North America attachment manufacturing to Sulligent, Alabama and $0.3 million of unfavorable currency movements. The restructuring costs include plant rearrangement and changes to information technology infrastructure.
Nuvera's operating loss decreased compared with the prior year mainly as a result of product development funding received from third-parties.
The Company recognized net income attributable to stockholders of
$16.2 million
in the
second
quarter of
2019
compared with
$5.6 million
in the
second
quarter of
2018
. The increase was primarily the result of higher operating profit in the second quarter of 2019 compared with the second quarter of 2018.
First Six Months
of
2019
Compared with
First Six Months
of
2018
The following table identifies the components of change in revenues for the
first six months of 2019
compared with the
first six months of 2018
:
|
|
|
|
|
|
|
|
Revenues
|
2018
|
|
$
|
1,554.4
|
|
Increase (decrease) in 2019 from:
|
|
|
Unit price
|
|
51.9
|
|
Unit volume and product mix
|
|
50.1
|
|
Maximal revenues
|
|
32.7
|
|
Other
|
|
15.3
|
|
Parts
|
|
11.8
|
|
Nuvera revenues
|
|
5.4
|
|
Bolzoni revenues
|
|
5.1
|
|
Foreign currency
|
|
(35.7
|
)
|
2019
|
|
$
|
1,691.0
|
|
Revenues increased 8.8% to
$1,691.0 million
in the
first six months of 2019
from
$1,554.4 million
in the
first six months of 2018
. The increase was mainly due to improved pricing to offset material cost increases and tariffs, higher unit volume and
product mix in the lift truck business, the acquisition of Hyster-Yale Maximal and increased Nuvera and Bolzoni revenues. These items were partially offset by unfavorable currency movements from the translation of sales into U.S. dollars.
Revenues in the Americas increased in the first six months of 2019 compared with the first six months of 2018 primarily as a result of improved pricing and higher unit volume and mix and parts sales. The higher pricing was implemented to offset material cost increases and tariffs.
EMEA's revenues increased mainly as a result of higher shipments of higher-priced lift trucks and improved pricing, partially offset by unfavorable currency movements of $26.2 million from the translation of sales into U.S. dollars.
Revenues in JAPIC increased primarily as a result of the acquisition of Hyster-Yale Maximal, partially offset by unfavorable foreign currency movements of $5.0 million from the translation of sales into U.S. dollars.
The increase in Bolzoni's revenues was mainly due to higher volume, partially offset by unfavorable foreign currency movements of $6.7 million from the translation of sales into U.S. dollars.
Nuvera's revenues increased as a result of development funding received associated with third-party development agreements and increased recognized sales of fuel cell battery box replacements ("BBRs"). For periods prior to the fourth quarter of 2018, Nuvera deferred revenue on its BBRs because of an inability to estimate future costs, including warranty. The Company established a warranty reserve and began recognizing revenue in the fourth quarter of 2018.
The following table identifies the components of change in operating profit for the
first six months of 2019
compared with the
first six months of 2018
:
|
|
|
|
|
|
Operating Profit
|
2018
|
$
|
30.0
|
|
Increase (decrease) in 2019 from:
|
|
Lift truck selling, general and administrative expenses
|
(17.1
|
)
|
Bolzoni operations
|
(2.4
|
)
|
Lift truck gross profit
|
12.9
|
|
Nuvera operations
|
2.9
|
|
2019
|
$
|
26.3
|
|
The Company recognized operating profit of
$26.3 million
in the
first six months of 2019
compared with
$30.0 million
in the
first six months of 2018
. The decrease in operating profit was mainly due to an increase in lift truck selling, general and administrative expenses primarily related to higher product development costs to support the Company's strategic initiatives. Lift truck gross profit increased mainly as a result of improved pricing partially offset by higher material and manufacturing costs in the first six months of 2019.
Operating profit in the Americas decreased in the first six months of 2019 compared with the first six months of 2018 primarily as a result of higher selling, general and administrative expenses partially offset by higher gross profit. Selling, general and administrative expenses increased mainly from higher sales and product development costs to support the Company's strategic initiatives and increased employee-related expenses, partially offset by the absence of $2.4 million of Maximal acquisition-related costs incurred in 2018. The increase in gross profit was mainly attributable to improved pricing, higher parts volumes and $4.9 million of favorable retroactive tariff exclusion adjustments for certain components imported from China, which includes $3.1 million of refunds for tariffs incurred prior to the second quarter of 2019. These increases were partially offset by higher material cost and aluminum and steel tariffs, a shift in sales to lower-margin trucks and $5.7 million of unfavorable foreign currency movements.
EMEA's operating profit increased in the first six months of 2019 compared with the first six months of 2018 primarily as a result of price increases and favorable foreign currency movements of $2.3 million, partially offset by higher material costs.
The operating loss in JAPIC increased mainly as a result of the acquisition of Maximal and unfavorable foreign currency movements of $0.6 million.
Bolzoni's operating profit decreased mainly as a result of $2.0 million of restructuring costs in the first six months of 2019 related to the transfer of Bolzoni's North America attachment manufacturing to Sulligent, Alabama. These costs include plant rearrangement, changes to information technology infrastructure and severance expenses.
Nuvera's operating loss decreased compared with the prior year mainly as a result of product development funding received from third-parties.
The Company recognized net income attributable to stockholders of
$19.6 million
in the
first six months of 2019
compared with
$20.5 million
in the
first six months of 2018
. The decrease was primarily the result of lower operating profit and higher interest expense from higher borrowing levels during the first six months of 2019 compared with the first six months of 2018. These items were partially offset by favorable mark-to-market adjustments on an equity investment in a third-party.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
The following tables detail the changes in cash flow for the
six months ended
June 30
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
Change
|
Operating activities:
|
|
|
|
|
|
Net income
|
$
|
20.1
|
|
|
$
|
20.6
|
|
|
$
|
(0.5
|
)
|
Depreciation and amortization
|
22.0
|
|
|
20.8
|
|
|
1.2
|
|
Dividends from unconsolidated affiliates
|
5.1
|
|
|
22.2
|
|
|
(17.1
|
)
|
Working capital changes
|
(123.0
|
)
|
|
(18.0
|
)
|
|
(105.0
|
)
|
Other
|
4.9
|
|
|
6.4
|
|
|
(1.5
|
)
|
Net cash provided by (used for) operating activities
|
(70.9
|
)
|
|
52.0
|
|
|
(122.9
|
)
|
Investing activities:
|
|
|
|
|
|
Expenditures for property, plant and equipment
|
(18.4
|
)
|
|
(16.0
|
)
|
|
(2.4
|
)
|
Business acquisitions, net of cash acquired
|
—
|
|
|
(74.3
|
)
|
|
74.3
|
|
Proceeds from the sale of assets
|
0.8
|
|
|
0.8
|
|
|
—
|
|
Net cash used for investing activities
|
(17.6
|
)
|
|
(89.5
|
)
|
|
71.9
|
|
Cash flow before financing activities
|
$
|
(88.5
|
)
|
|
$
|
(37.5
|
)
|
|
$
|
(51.0
|
)
|
Net cash provided by (used for) operating activities decreased $122.9 million in the first six months of 2019 compared with the first six months of 2018, primarily as a result of the change in working capital items and lower dividends from unconsolidated affiliates. The change in working capital was primarily attributable to increased accounts receivable from higher unit sales volume and a change in the timing of receipts from customers, as well as higher inventory levels predominantly caused by supplier parts shortages. In addition, the first six months of 2018 includes dividends from HYGFS resulting from a one-time benefit associated with the Tax Cuts and Jobs Act.
The change in net cash used for investing activities during the first six months of 2019 compared with the first six months of 2018 is due to the acquisition of Hyster-Yale Maximal in 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
Change
|
Financing activities:
|
|
|
|
|
|
Net increases (decreases) of long-term debt and revolving credit agreements
|
$
|
67.2
|
|
|
$
|
(14.5
|
)
|
|
$
|
81.7
|
|
Cash dividends paid
|
(10.4
|
)
|
|
(10.1
|
)
|
|
(0.3
|
)
|
Other
|
(0.7
|
)
|
|
(1.5
|
)
|
|
0.8
|
|
Net cash provided by (used for) financing activities
|
$
|
56.1
|
|
|
$
|
(26.1
|
)
|
|
$
|
82.2
|
|
Net cash provided by (used for) financing activities increased $82.2 million in the first six months of 2019 compared with the first six months of 2018. The increase was primarily related to higher borrowings on the Facility (as defined below) and other debt in the first six months of 2019 compared with the first six months of 2018. The borrowings on the Facility during the first six months of 2019 were primarily used to fund working capital needs.
Financing Activities
The Company has a $240.0 million secured, floating-rate revolving credit facility (the "Facility”) that expires in April 2022. There was
$71.2 million
borrowings outstanding under the Facility at
June 30, 2019
. The availability under the Facility at
June 30, 2019
was
$164.5 million
, which reflects reductions of
$4.3 million
for letters of credit and other restrictions. As of
June 30, 2019
, the Facility consisted of a U.S. revolving credit facility of
$150.0 million
and a non-U.S. revolving credit facility of
$90.0 million
. The obligations under the Facility are generally secured by a first lien on the working capital assets of the borrowers in the Facility, which include but are not limited to, cash and cash equivalents, accounts receivable and inventory (the "Facility Collateral") and a second lien on the Term Loan Collateral (defined below). The approximate book value of assets held as collateral under the Facility was
$975 million
as of
June 30, 2019
.
Borrowings bear interest at a floating rate based on a base rate or LIBOR, as defined in the Facility, plus an applicable margin. The applicable margins, as of
June 30, 2019
, for U.S. base rate loans and LIBOR loans were
0.50%
and
1.50%
, respectively. The applicable margin, as of
June 30, 2019
, for non-U.S. base rate loans and LIBOR loans was
1.50%
. The applicable LIBOR interest rates under the Facility on
June 30, 2019
were
3.938%
and
3.875%
for the U.S. facility and
1.50%
for the non-U.S. facility including the applicable floating rate margin. The Facility also required the payment of a fee of
0.250%
per annum on the unused commitment as of
June 30, 2019
.
The Facility includes restrictive covenants, which, among other things,
limit additional borrowings and investments of the Company and its subsidiaries subject to certain thresholds, as set forth in the Facility, and limits the payment of dividends. If average availability for both total and U.S. revolving credit facilities, on a pro forma basis, is greater than 15% and less than or equal to 20%, the Company may pay dividends subject to achieving a minimum Fixed Charge Coverage Ratio of 1.00 to 1.00, as defined in the Facility. If the average availability is greater than 20% for both total and U.S. revolving credit facilities, on a pro forma basis, the Company may pay dividends without any minimum Fixed Charge Coverage Ratio requirement. The Facility also requires the Company to achieve a minimum Fixed Charge Coverage Ratio in certain circumstances in which total excess availability is less than 10% of the total commitments under the Facility or excess availability under the U.S. revolving credit facility is less than 10% of the U.S. revolver commitments, as defined in the Facility.
At
June 30, 2019
, the Company was in compliance with the covenants in the Facility.
The Company also has a
$200.0 million
term loan (the "Term Loan"), which matures in May 2023. The Term Loan requires
quarterly principal payments on the last business day of each March, June, September and December in an amount equal to $2.5 million. The final principal repayment is due on May 30, 2023.
The Company may also be required to make mandatory prepayments, in certain circumstances, as provided in the Term Loan. At
June 30, 2019
, there was
$180.0 million
of principal outstanding under the Term Loan which has been reduced in the unaudited condensed consolidated balance sheet by
$3.2 million
for discounts and unamortized deferred financing fees.
The obligations under the Term Loan are generally secured by a first priority lien on the present and future shares of capital stock, material real property, fixtures and general intangibles consisting of intellectual property (collectively, the "Term Loan Collateral") and a second priority lien on the Facility Collateral. The approximate book value of assets held as collateral under the Term Loan was
$650 million
as of
June 30, 2019
.
Borrowings under the Term Loan bear interest at a floating rate, which can be a base rate or Eurodollar rate, as defined in the Term Loan, plus an applicable margin. The applicable margin, as provided in the Term Loan, is
2.25%
for base rate loans and
3.25%
for Eurodollar loans. The interest rate on the amount outstanding under the Term Loan at
June 30, 2019
was
5.65%
.
In addition, the Term Loan includes restrictive covenants, which, among other things, limit additional borrowings and investments of the Company subject to certain thresholds, as provided in the Term Loan. The Term Loan limits the payment of regularly scheduled dividends and other restricted payments to $50.0 million in any fiscal year, unless the consolidated total net leverage ratio, as defined in the Term Loan, does not exceed 1.75 to 1.00 at the time of the payment.
At
June 30, 2019
, the Company was in compliance with the covenants in the Term Loan.
The Company had other debt outstanding, excluding finance leases, of approximately
$107.1 million
at
June 30, 2019
. In addition to the excess availability under the Facility, the Company had remaining availability of
$18.4 million
related to other non-U.S. revolving credit agreements.
The Company believes funds available from cash on hand, the Term Loan, the Facility, other available lines of credit and operating cash flows will provide sufficient liquidity to meet its operating needs and commitments during the next twelve months and until the expiration of the Facility in April 2022.
Contractual Obligations, Contingent Liabilities and Commitments
Since
December 31, 2018
, there have been no significant changes in the total amount of the Company's contractual obligations or commercial commitments, or the timing of cash flows in accordance with those obligations, as reported on pages 27 and 28 in the Company's Annual Report on Form 10-K for the year ended
December 31, 2018
.
Capital Expenditures
The following table summarizes actual and planned capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2019
|
|
Planned for Remainder of 2019
|
|
Planned 2019 Total
|
|
Actual 2018
|
Lift truck business
|
|
$
|
12.6
|
|
|
$
|
37.2
|
|
|
$
|
49.8
|
|
|
$
|
31.8
|
|
Bolzoni
|
|
2.8
|
|
|
5.3
|
|
|
8.1
|
|
|
4.2
|
|
Nuvera
|
|
3.0
|
|
|
5.6
|
|
|
8.6
|
|
|
2.8
|
|
|
|
$
|
18.4
|
|
|
$
|
48.1
|
|
|
$
|
66.5
|
|
|
$
|
38.8
|
|
Planned expenditures for the remainder of
2019
are primarily for product development, improvements to information technology infrastructure, improvements at manufacturing locations and manufacturing equipment. The principal sources of financing for these capital expenditures are expected to be internally generated funds and bank financing.
Capital Structure
The Company's capital structure is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JUNE 30
2019
|
|
DECEMBER 31
2018
|
|
Change
|
Cash and cash equivalents
|
$
|
50.3
|
|
|
$
|
83.7
|
|
|
$
|
(33.4
|
)
|
Other net tangible assets
|
718.8
|
|
|
601.3
|
|
|
117.5
|
|
Intangible assets
|
63.9
|
|
|
67.7
|
|
|
(3.8
|
)
|
Goodwill
|
108.0
|
|
|
108.3
|
|
|
(0.3
|
)
|
Net assets
|
941.0
|
|
|
861.0
|
|
|
80.0
|
|
Total debt
|
(370.9
|
)
|
|
(301.5
|
)
|
|
(69.4
|
)
|
Total equity
|
$
|
570.1
|
|
|
$
|
559.5
|
|
|
$
|
10.6
|
|
Debt to total capitalization
|
39
|
%
|
|
35
|
%
|
|
4
|
%
|
INVESTOR PERSPECTIVE
The Company is currently undertaking the largest set of programs in its history. These programs are expected to have a transformational impact on the Company’s competitiveness, market position and economic performance over the next three to five years.
For some time, the Company has been focused on six strategic initiatives:
1.
Provide the lowest cost of ownership, while enhancing productivity for customers.
2.
Be the leader in the delivery of industry- and customer-focused solutions.
3.
Be the leader in independent distribution.
4.
Grow in emerging markets.
5.
Be the leader in the attachments business.
6.
Be a leader in fuel cells and their applications.
The projects required to execute fully on these initiatives have been, in general, initiated over the last several years and many are now moving toward completion. Further, many of the projects supporting these strategic initiatives are inter-related and succeeding in one will foster success in others. In total, these projects have required, and continue to require, significant up-front expense and capital expenditure investment. The projects cover a very broad range of the Company's activities, including product development, supply chain, IT, manufacturing, sales and marketing for each of the Company’s three major businesses: Lift Truck, Bolzoni and Nuvera.
Over the course of the past two years, these investments, both expense and capital, have increased significantly. Further increased investments are expected to continue to be made in the remainder of 2019 and in 2020, and then generally remain at or below the 2019 levels for the next several years. The return from these investments has started to be realized and is expected to increase over the course of the Company's five-year planning period. In this context, Lift Truck's results are expected to improve considerably in 2019 over 2018. While results in the first half of the year were moderately lower than the first half of 2018, results in the second half of 2019 are expected to improve significantly over both the second half of 2018
and the first half of 2019, principally in the fourth quarter. Beginning in 2020, further improved results are expected with significant increases through 2023. Lift Truck's objective is to achieve its target of 7% operating profit margin in this period assuming reasonable market conditions continue. Bolzoni’s results are expected to decrease in 2019 primarily due to the restructuring of its Americas operations, but results in the following years are expected to improve with a target of achieving a 7% operating profit margin. Nuvera’s results are expected to improve moderately over the course of 2019 with break-even expected to be reached during the second half of 2020. Nuvera's quarterly break-even target has been adjusted primarily due to a delay in shipments of engines for a key customer in China resulting from the need for additional unplanned, customer-driven product validation. Significantly improved earnings are expected at Nuvera in the 2021 to 2023 time period. At each of these three businesses, the investments being undertaken are expected to lead to increased operating profit through higher volume, decreased product costs and improved pricing, partially offset by a higher level of operating expense. Overall, 2019 consolidated operating profit is expected to increase significantly over 2018, with the improvement coming in the fourth quarter.
Lift Truck's product programs are expected to lay the groundwork for enhanced market position by providing lower cost of ownership and enhanced productivity for the Company’s customers. At the core of these programs is a new set of modular and scalable product families covering both internal combustion engine and electric trucks, which will provide customers with enhanced flexibility for meeting their application needs combined with the benefit of lowest total cost of ownership. Implementation of these programs is expected to begin in 2020 with the introduction of the first of a new range of counterbalanced trucks. This range will be expanded comprehensively to include larger counterbalanced capacities, Big Trucks and warehouse trucks. A further major initiative in product offerings will come from the introduction of trucks manufactured by Hyster-Yale Maximal, Lift Truck’s majority-owned joint venture in China. A line of trucks from Hyster-Yale Maximal has been engineered to provide high-quality and reliable, lower-duty trucks for global markets and standard trucks for the Chinese market. In addition, Lift Truck’s partner in India is expected to expand local production of larger trucks. Further, in the first quarter of 2019, a new end rider and a new automated Reach Truck were launched in the North America market, and new lower-cost Class 3 walkie and stacker global products are expected to be introduced during the second half of 2019. A range of lower-cost Class 3 lift trucks was launched in certain markets during the second quarter. Further, additional products are being added to the product line-up in 2020. To further enhance productivity for customers, Lift Truck is developing additional automation solutions for warehouse trucks, initially in combination with industry partners. Some of these products are already in the market today, but new solutions and customers are expected to be developed progressively over the next several years. Lift Truck continues to expand sales of telemetry products. New generations of lift trucks will offer a fully integrated telematics solution. Finally, Lift Truck anticipates introducing new fuel cell BBRs for Class 1, 2 and 3 forklift trucks over the next two years, beginning with the first model in the first quarter of 2020, that are expected to move the fuel cell BBR business to break-even.
The introduction of these new products will lead to significant changes in supply chain sourcing and in the Company’s various manufacturing facilities around the world. Consolidated component volume sourced globally from reliable partners is expected to reduce costs and improve quality as these new products are brought to market over the next two to three years. Lift Truck’s largest manufacturing facilities in Berea, Craigavon and Greenville are undergoing significant change and are expected to have reduced costs and improved productivity while most other plants will see more modest changes. China production activities are expected to be consolidated at the Hyster-Yale Maximal facility by the end of 2019.
Lift Truck currently has over 400 different forklift models in its range, including Hyster-Yale Maximal models, which are supported by its capability to customize these trucks to meet specific customer needs. The modular nature of the new products being introduced will enhance Lift Truck's ability to meet exact customer needs at lowest cost, both at the industry level and at the individual customer level. To achieve the full expected benefit from these programs, Lift Truck continues to make substantial expense investments in its sales and marketing organizations to realign teams around industry groupings. Within marketing, industry-focused resources have been added to develop industry strategies. The higher-priority industry strategies have been completed for North America and Europe. All of the strategies are expected to be completed for all countries, or groups of countries, around the world by the end of 2019 but will mature and be enhanced over future years. To support execution of these industry strategies, Lift Truck has invested in additional industry-focused sales capabilities to support its dealers. This industry-focused structure has been in place and highly successful in its National Account direct sales program and is now being deployed with the new dealer support teams. These investments are largely in place in North America, and to a lesser degree in EMEA. Additional sales capabilities are expected to be added in other areas around the world over the next two years. In total, the Company believes that these projects will put it in a position to be a leader in the delivery of industry- and customer-focused solutions worldwide.
While the new sales teams will support dealers’ sales efforts, the Company also intends to continue to upgrade its global dealer capabilities. A core objective is to have dealers that are fully capable of maximizing the potential of the Hyster
®
and Yale
®
brands in their territories. These dealers will be supported by Lift Truck's commitment to helping dealers strengthen the excellence of their activities in all areas of their business, including leadership, sales, parts, service, rental, leasing and
remarketing. To help these programs have maximum impact, the Company intends to invest over the next few years in enhanced digital customer experience systems. Taken together, these initiatives amount to a new, uniquely competitive way of serving the markets around the world.
Bolzoni is also pursuing very aggressive projects to expand its global market position. These projects include strengthening Bolzoni’s ability to serve the Americas market by having responsibility for Lift Truck’s Sulligent plant, where it is manufacturing attachments and also continuing the plant’s support of Lift Truck through the supply of cylinders and various other components. In the first half of 2019, Bolzoni phased out production at its current Homewood, Illinois facility and substantially completed the shift of manufacturing to Sulligent. Bolzoni is still maintaining a distribution center and certain other operations in the Homewood area. At March 31, 2019, Bolzoni recorded a restructuring charge associated with these plans. Payments related to this restructuring plan are expected to be made through 2019. In addition to the restructuring charge of $1.4 million recorded in the first quarter, Bolzoni incurred charges during the second quarter of $0.6 million and anticipates it will incur additional charges during the second half of 2019 of approximately $2.2 million to $3.5 million for further restructuring-related costs.
There is a large opportunity for growth in the Americas market for attachments. To help capture this, Bolzoni plans to introduce a broader range of locally produced attachments with shorter lead times to serve its customer base. Bolzoni also is in the process of increasing its sales, marketing and product support capabilities in North America, and is planning to establish a small assembly function in Brazil to serve the Latin America market. In addition, it has developed a standard product line sourced from one of its factories in China, which will continue to be expanded. Bolzoni’s current outstanding premium line of products coupled with these standard products and an industry-focused strategy are expected to give Bolzoni the ability to increase its sales significantly in the Americas, JAPIC and EMEA regions. These new programs are expected to increase Bolzoni’s market position and profitability, especially over the next three to four years.
Nuvera is approaching the point where it will move from being a venture business focused on commercializing leading technology to a stable, product-based company serving not only the forklift truck market, but also heavy-duty applications such as buses and trucks and applications in the automotive sector with an expanding line of developed products. Nuvera expects its core technology to move to a new generation of fuel cell stack design over the next year with broad application in each of these markets. Nuvera is focused on continuously improving the quality of its fuel cell engines. Also, the cost of its fuel cell engines has been improving. These performance and cost factors are expected to reach target objectives over the next two years. With the transfer of the responsibility for development of non-fuel-cell engine components and the overall assembly of Class 1 and Class 2 BBRs to Lift Truck during the second and third quarters of 2019 and Class 3 BBRs in early 2020, Nuvera will be focused entirely on fuel cell stacks and engines by mid-2020. To enhance its cost base, Nuvera continues to work on standardizing its products, developing low-cost suppliers and automating various elements of stack production. Robotic stack assembly lines have been in development for some time, and Nuvera expects to bring the first one of two planned online by the end of 2019. In overview, Nuvera’s objective is to reduce its loss in the second half of 2019 compared with the second half of 2018 and to reach break-even during the second half of 2020, with increasing profitability over the following three years.
In summary, the Company believes it is approaching an inflection point in its business. While the third quarter of 2019 is expected to reflect continued investment in these programs, similar to the first half of the year, the fourth quarter is expected to improve significantly in comparison to the 2018 fourth quarter and the first three quarters of 2019. Efforts to abate some of the most critical Big Truck supplier issues have succeeded, but there are still significant shortages from key suppliers in the United States that are not expected to be resolved fully until the fourth quarter. Plans established in 2018 to find offsets to the tariff-driven, unprecedented material cost inflation witnessed last year began to mature in the first half of 2019 and are expected to continue to mature and result in recovering margins during the remainder of the year. In addition, on April 18, 2019, the U.S. Trade Representative posted a notice announcing its determination to grant additional exclusion requests for certain duties on Chinese goods. The exclusions were applied retroactively to the July 6, 2018 effective date and extend for one year after the notice of exclusions, or April 2020. Certain components of fork lift trucks, including counterweights and forks were listed in the notice as exclusions for the duties, while other components that the Company and its suppliers import from China are still subjected to certain tariffs. During the second quarter, the Company recorded duties recoverable for the period of July 6, 2018 through the 2019 second quarter. The Company expects to be able to record additional recoveries later in the year when it receives recovered tariff costs from certain suppliers. In May 2019, additional tariffs were imposed on certain Chinese goods. The Company expects that the favorable impact of the exclusions announced in April is greater than the anticipated unfavorable effect of the new tariffs announced in May.
The current lift truck backlog contains certain deal-specific pricing agreements at less than target margins to gain targeted accounts and for which margin improvement efforts will take some time to mature. These agreements reduced profitability in the first half of 2019 and will continue to have an impact on results in the second half of the year. Margins are expected to
recover fully from the 2018 material cost inflation and the heavily discounted deals by the fourth quarter of 2019, as well as continue to be enhanced by the exemption of tariffs on certain Chinese components.
For the 2019 full year, consolidated cash flow before financing activities is expected to decrease significantly compared with 2018, after excluding the impact of the 2018 acquisition of Hyster-Yale Maximal. This decrease is primarily due to increased working capital, particularly accounts receivable, during the first half of the year, as well as higher capital expenditures. Working capital is expected to improve significantly in the second half of 2019 as the inventory supplier issues are resolved, but the improvement is not expected to fully offset the higher working capital in the first half of the year.
In 2020 and 2021, a considerable portion of the new projects outlined above are expected to have reached completion for all three companies and the Company believes the full impact of these programs can lead to profitability improvements for a number of years to come. The remainder of the programs are expected to come to maturity mainly in 2022 and 2023, with a few, particularly those involving dealer structure and excellence, being more in the nature of continuous improvement projects rather than projects which reach maturity at a given time. Of course, the absolute level of profitability will reflect actual market demand levels, which showed substantial softening, particularly in the Americas, and to a lesser extent EMEA, in the first half of 2019. While markets are still at historically high levels, it appears the market could be at the beginning of a downturn, which is currently projected to be moderate and of limited duration. As a result, in 2019, the Company is currently forecasting strong but moderating forklift market levels. The Company continues to forecast a resolution to Brexit in a way that does not significantly harm Hyster-Yale’s business prospects.
The Company believes that investors who are focused on mid-term business improvement in market position and profitability will find that Hyster-Yale’s focus is consistent with those investment objectives.
EFFECTS OF FOREIGN CURRENCY
The Company operates internationally and enters into transactions denominated in foreign currencies. As a result, the Company is subject to the variability that arises from exchange rate movements. The effects of foreign currency fluctuations on revenues, operating profit and net income are addressed in the previous discussions of operating results. See also Item 3, "Quantitative and Qualitative Disclosures About Market Risk,” in Part I of this Quarterly Report on Form 10-Q.
FORWARD-LOOKING STATEMENTS
The statements contained in this Form 10-Q that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are made subject to certain risks and uncertainties, which could cause actual results to differ materially from those presented. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Among the factors that could cause plans, actions and results to differ materially from current expectations are, without limitation:
(1) reduction in demand for lift trucks, attachments and related aftermarket parts and service on a global basis, (2) delays in delivery or increases in costs, including transportation costs or the imposition of tariffs, of raw materials or sourced products and labor or changes in or unavailability of quality suppliers, (3) delays in manufacturing and delivery schedules, (4) the successful commercialization of Nuvera's technology, (5) customer acceptance of pricing, (6) the political and economic uncertainties in the countries where the Company does business, (7) the ability of dealers, suppliers and end-users to obtain financing at reasonable rates, or at all, as a result of current economic and market conditions, (8) exchange rate fluctuations and monetary policies and other changes in the regulatory climate in the countries in which the Company operates and/or sells products, (9) bankruptcy of or loss of major dealers, retail customers or suppliers, (10) customer acceptance of, changes in the costs of, or delays in the development of new products, (11) introduction of new products by, or more favorable product pricing offered by, competitors, (12) product liability or other litigation, warranty claims or returns of products, (13) the effectiveness of the cost reduction programs implemented globally, including the successful implementation of procurement and sourcing initiatives, (14) changes mandated by federal, state and other regulation, including tax, health, safety or environmental legislation, (15) unfavorable effects of geopolitical and legislative developments on global operations, including without limitation, the United Kingdom's exit from the European Union, the entry into new trade agreements and the imposition of tariffs and/or economic sanctions, (16) delays in or increased costs of moving Bolzoni's North America attachment manufacturing from Homewood, Illinois, to Sulligent, Alabama, and (17) Hyster-Yale may not be able to successfully integrate Maximal's operations and employees.