Hyster-Yale Materials Handling, Inc. (HY) Q4 2022 Earnings Call Transcript

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Hyster-Yale Materials Handling, Inc. (NYSE:HY) Q4 2022 Earnings Conference Call February 28, 2023 11:00 AM ET

Company Participants

Christina Kmetko – Investor Relations

Al Rankin – Chairman and Chief Executive Officer

Rajiv Prasad – President

Scott Minder – Senior Vice President, Chief Financial Officer and Treasurer

Conference Call Participants

Chip Moore – EF Hutton

Steve Ferazani – Sidoti

Brett Kearney – Gabelli & Company


Hello everyone, and invited to nan Hyster-Yale Fourth Quarter 2022 and Full Year Earnings Conference Call. My sanction is Bruno and I'll beryllium operating your telephone today. [Operator Instructions]

I will now manus complete to your host, Christina Kmetko. Please spell ahead.

Christina Kmetko

Thank you. Good morning, everyone, and acknowledgment for joining america today. Welcome to our 2022 4th fourth and afloat twelvemonth net call. I’m Christina Kmetko, and I'm responsible for Investor Relations astatine Hyster-Yale. Joining maine connected today's telephone are Al Rankin, Chairman and Chief Executive Officer; Rajiv Prasad, President; and Scott Minder, our Senior Vice President, Chief Financial Officer and Treasurer.

Yesterday evening, we published our 2022 4th fourth and afloat twelvemonth results and revenge our 10-K, some of which are disposable connected our website. Today's telephone is being recorded and webcast. The webcast will beryllium connected our website later this day and disposable for astir 12 months.

Our remarks that follow, including answers to your questions, incorporate forward-looking statements. These statements are taxable to respective risks and uncertainties that could origin existent results to disagree materially from those expressed successful nan forward-looking statements made present today. These risks include, among others, matters that we person described successful our net merchandise issued past nighttime and successful our 10-Q and different filings pinch nan SEC. We disclaim immoderate responsibility to update these forward-looking statements, which whitethorn not beryllium updated until our adjacent quarterly net convention call, if astatine all.

With nan formalities retired of nan way, I'll move nan telephone complete to Rajiv.

Rajiv Prasad

Thank you, Christie, and bully morning, everyone. I'll commencement by giving you nan operational position and I'll besides supply immoderate colour commentary connected our markets. As you'll hear, we've made important advancement in nan past 4th and we expect this affirmative inclination to proceed successful 2023. Scott will supply you pinch nan elaborate financial results and Al will adjacent nan telephone pinch his strategical position and return america into nan Q&A.

While Scott will springiness you nan financial pluses and minuses, I'd for illustration to constituent retired that for nan first clip since 2021 2nd 4th reported some quarterly operating profit and quarterly nett income astatine nan consolidated level. Our 4th fourth profits exceeded nan expectations we laid retired astatine our telephone are mostly owed to higher volume, ongoing costs discipline, and improved merchandise margins driven by higher pricing. Those efforts much than offset nan antagonistic effect from proviso concatenation shortages and nan effect of unfavorable rate movement.

Our expertise to get basal components and their related accumulation effect has been nan important taxable this year, truthful I'll commencement there. Our portion shipments accrued astir 11% sequentially and we're modestly higher than nan 4th fourth 2021. These accrued shipping rates are owed to less constituent shortages and little wide proviso concatenation disruption than successful erstwhile quarters, pinch nan America seeing nan largest improvements.

While nan America's challenges person moderated important accumulation constraints, continuing Europe. Sourcing difficulties for definite captious components arsenic good arsenic ample labour shortages successful immoderate skilled accumulation jobs stay a concern. As a result, while 4th fourth 2022 shipments grew capacity utilization levels successful Europe and nan U.S. fell short of plan, we proceed to expect to summation our accumulation complaint arsenic these labour issues abate. However, contempt nan accumulation disruptions successful 2022, we've produced astir 6,000 much units year-over-year, exceeding 100,000 successful yearly shipment for only nan 2nd clip successful our history.

Looking ahead, we expect to build connected 4th quarter’s momentum. Full twelvemonth 2023, accumulation and shipment volumes are expected to transcend 2022 levels. Our backlog is astatine a very precocious level and bookings proceed astatine sound levels. These anticipated improvements are mostly owed to accrued constituent readiness and trim world proviso volatility. As a result, we judge that our important portion backlog and lengthy lead times will alteration towards much competitory levels.

In nan 4th quarter, costs pressures remained elevated. This was astir acute successful nan EMEA, wherever costs ostentation occurred later successful 2022 and remains much important successful portion owed to nan ongoing proviso uncertainties astir nan Russia, Ukraine conflicts. In contrast, ostentation rates successful Americas and JAPIC person slowed significantly.

Forward economical indicators propose much mean 2023 costs ostentation trends, absent immoderate unforeseen shocks. As we've shared successful erstwhile quarters, we've implemented aggregate value increases complete nan past 2 years to offset persistent inflation.

We are gaining crushed and looking ahead, we expect nan operation of our higher value backlogs and moderating costs ostentation inclination to create separator uplift done 2023 and into 2024. However, we'll proceed to show our worldly and labour costs intimately including nan imaginable effect from tariffs and will set pricing arsenic needed to support advancement towards our semipermanent portion separator goals.

Now, I’ll stock my views connected nan world markets. Demand for Lift Truck remains beardown but has moderated astir nan globe. While outer 4th fourth marketplace information is not yet available, our soul estimates bespeak that nan world Lift Truck marketplace declined successful nan quarters crossed each geographic regions compared to 4th fourth 2021.

Using nan aforesaid data, world marketplace volumes improved versus nan 3rd 4th owed to advancement successful nan EMEA. Looking ahead, we expect nan Lift Truck marketplace to alteration successful each 2023 4th erstwhile compared to 2022. Despite these declines, markets should stay supra pre-pandemic levels, moreover successful nan discourse of wide recessionary concerns.

Lift Truck bookings decreased successful nan 4th fourth compared to a robust anterior year. Several factors contributed to nan drop. First, nan world marketplace declined compared to grounds levels. Second, we proceed to book – attraction connected booking orders pinch coagulated margins, and lastly, because of lead times beyond our normal levels.

Sequentially bookings accrued modestly versus nan 3rd 4th of 2022, mostly owed to a seasonal rebound successful EMEA and amended than expected conditions successful Americas. Looking guardant to our afloat twelvemonth 2023, we expect little year-over-year booking inclination to proceed owed to slowing economical activity mixed pinch a continued attraction connected booking orders pinch higher margins.

As nan twelvemonth progresses, we’ll activity to equilibrium our booking rates and alteration accumulation lead times connected a statement by statement basis. Although, accrued accumulation rates and little bookings person decreased our backlog by astir 10% since its highest successful first 4th of 2022. It remains good supra our humanities averages.

As we noted past quarter, accrued bid selectivity and higher accumulation complaint person led to higher mean portion value and margins successful our backlog. Said differently, we’ve been producing nan oldest and lowest separator units and adding booking and shipping units pinch overmuch improved economics pinch each passing 4th to quantify this benefit, nan mean income value of a backlog portion accrued by astir 35% year-over-year and almost 7% sequentially.

As we proceed to activity towards done our backlog successful 2023, nan mostly of nan remaining little separator units value successful anterior years are expected to beryllium produced successful nan first half of nan year. As a result, mean portion margins are expected to amended successful 2023 and early 2024. As we germinate further into our extended backlog.

Beyond this baseline perspective, we are considering various economical scenarios complete nan adjacent 12 months to 24 months including nan imaginable for a world aliases important location recession arsenic portion of our readying process. Our existent backlog of higher separator trucks extends done 2023 and into 2024. This should supply a daze absorber against immoderate recession related marketplace downturn.

Helping to prolong our business done a recession is worthy noting arsenic portion of this study that our existent bid cancellation complaint is rather debased by humanities standards, reflecting nan underlying request for caller replacement Lift Truck and nan sound worth proposition we supply to our customers, we expect this request inclination to continue.

I’ll summarize my comments by saying we stay focused connected mitigating nan impacts from our proviso concatenation challenges. Our teams are moving intimately pinch our suppliers to get what’s needed for accumulation erstwhile it’s needed. As we summation accumulation rates crossed 2023, we judge nan higher portion prices and margins baked into our backlog should supply a important operating profit improvement.

Ongoing bid bookings subject will support this profitability inclination complete nan longer term. As our higher shipments tin summation and nan marketplace diminution drives little booking, we expect our backlog to statement and trim lead times backmost to normal life levels. This process will return clip and will stay focused connected profitability and rate procreation throughout.

Now, I’ll move nan telephone complete to Scott to update you connected nan financial results and supply our financial outlook.

Scott Minder

Thanks, Rajiv. As Rajiv mentioned, we adhd a coagulated quarter, returning to profitability and up of our expectations. I’ll commencement pinch immoderate precocious level comments connected our consolidated financial results and past adhd position connected nan 3 individual businesses.

In nan 4th quarter, our consolidated revenues of $985 cardinal were a quarterly record. They accrued almost 19% aliases much than $155 cardinal year-over-year. This maturation was owed to a astir 20% summation successful nan assistance motortruck business, which importantly outpaced its 1.5% shipment maturation complete nan aforesaid period. I’ll springiness immoderate further assistance motortruck specifications successful a moment.

Versus nan 3rd quarter, shipments accrued astir 11% while bookings remained level astir 21,000 units. Overall, our backlog dropped by astir 6% and ended nan twelvemonth astatine 102,100 units down almost 9% from its highest level successful nan 2nd 4th 2022.

Looking astatine profitability, nan institution reported a consolidated operating profit of astir $20 cardinal for nan 4th quarter. This compared to an operating nonaccomplishment of $107 cardinal successful nan 4th fourth 2021. The 2021 operating nonaccomplishment included non-cash goodwill impairment complaint of astir $56 cardinal related to nan assistance motortruck business successful Asia.

We reported nett income of $7.6 cardinal for nan 4th fourth 2022 compared pinch a nett nonaccomplishment of $103 cardinal successful nan anterior year. In summation to nan anterior year’s goodwill impairment, nan 2021 nett nonaccomplishment included a $19 cardinal complaint to found valuation allowances connected deferred taxation assets.

Now let’s look astatine nan results successful much detail. Our assistance motortruck business generated an operating profit of $27 cardinal successful nan 4th quarter, which was up of our expectations. This compared to an operating nonaccomplishment of $93 cardinal successful nan anterior year. Excluding nan impairment complaint I mentioned earlier, nan important betterment was mostly owed to accrued prices successful excess of worldly and freight ostentation successful nan quarter. This favorable price, nan costs ratio helps to compensate for ostentation successful excess of our prices for units booked successful 2020 and 2021. Higher portion and parts volumes on pinch accrued fleet revenues besides thief to thrust nan favorable comparison.

The assistance motortruck business’s 4th fourth operating profit improved substantially year-over-year contempt a $16 cardinal summation successful manufacturing costs caused by constituent shortage related inefficiencies, higher labour related costs, and $10 cardinal of unfavorable overseas rate impacts.

As Rajiv mentioned, contempt continued advancement connected clearing little separator products, accumulation of units booked anterior to much caller value increases acted arsenic a resistance connected our 4th fourth margins. We expect accumulation of these little separator units to trim importantly successful nan coming quarters.

Turning to Bolzoni, successful nan 4th quarter, nan business reported an operating profit of $2 cardinal versus a nonaccomplishment of astir $2 cardinal successful nan anterior year. The benefits from value increases and little worldly and manufacturing costs much than offset nan antagonistic effect from little income volumes, chiefly related to components utilized by our assistance motortruck business. A nonaccomplishment of $2.4 cardinal connected nan waste of a subsidiary and unfavorable rate movements besides negatively impacted nan quarter.

Nuvera, nan 4th fourth 2022’s operating nonaccomplishment of astir $9 cardinal decreased by 15% compared to nan anterior year’s nonaccomplishment of $11 million. 2021’s operating nonaccomplishment included a $1.2 cardinal complaint to trim inventory values. Excluding nan anterior twelvemonth charge, accrued revenues and improved separator drove nan humble year-on-year improvement. We exited 2022 astatine nan precocious profit 4th of nan year. As we look ahead, we expect to build connected that advancement successful 2023. These improvements are supported by what you’ve heard from Rajiv, less portion shortages and accrued manufacturing efficiencies arsenic constituent shortages moderate, starring to accrued assistance motortruck and attachment accumulation and shipments. Lower ostentation rates and nan ongoing benefits from our costs savings programme and subject sequential value increases to antagonistic inflation. Our strategical programs, which Al will touch connected successful a moment, should further heighten margins arsenic they mature.

As a consequence of these improvements, assistance motortruck business expects a important year-over-year summation successful revenues and to make a important operating profit successful 2023. We expect assistance trucks 2023 quarterly operating profit to build connected 2022’s 4th fourth while pursuing its normal seasonal pattern.

Moving to Bolzoni, we expect continued moderation successful constituent shortages, accrued customer request and further pricing gains successful 2023. As a result, Bolzoni is expected to amended margins and make higher operating profit successful 2023 compared to 2022. Finally, arsenic Nuvera continues to ramp up merchandise demonstrations and bookings, we expect nan benefits from income maturation to beryllium offset by higher costs. As a result, nan anticipated 2023 operating nonaccomplishment is expected to beryllium astir successful statement pinch 2022’s level. Taking a longer-term view, these demonstrations supply testing opportunities and unrecorded applications and laic nan instauration for early exertion take and improved financial returns astatine Nuvera successful nan years to come.

Before I manus nan telephone complete to Al, I’ll quickly screen nan equilibrium expanse results. In 2022, we generated affirmative rate travel earlier financing activities of $5 cardinal versus a astir $280 cardinal usage of rate successful 2022. That’s a large improvement, but much is required. As of year-end, nan institution had rate connected manus of $59 cardinal and full indebtedness of $553 million. This compared to rate connected manus of $69 cardinal and full indebtedness of $545 cardinal astatine nan extremity of 3rd quarter.

While our nett indebtedness showed a humble summation sequentially twelvemonth extremity levels were beneath nan highest reached successful June of 2022. We ended nan 4th pinch disposable borrowing capacity of astir $183 cardinal versus $191 cardinal astatine nan extremity of nan 3rd quarter. Our leverage ratio measured by indebtedness to full superior reduced by 900 ground points versus nan 3rd quarter, chiefly owed to our return to profitability.

As accumulation ramps up utilizing components already connected hand, we expect inventory to diminution passim 2023, resulting successful a important simplification successful inventory days connected manus by twelvemonth end. Assumptions underpinning our outlook, peculiarly accumulation rates are highly delicate to events that could effect world proviso chains. However, we’re focused connected controlling nan things that we tin and we’re amended prepared to negociate nan things that are extracurricular of our control. We’ll support you updated arsenic 2023 unfolds.

Now I’ll move nan telephone complete to Al to springiness his strategical perspective. Al?

Al Rankin

As you conscionable heard from Rajiv and Scott, we’re making advancement operationally and financially. Our 4th fourth net reflected nan improving profit value of nan robust backlog for which we are now producing trucks and we proceed to person coagulated bookings contempt softening marketplace conditions. Looking forward, we expect continued gains from building more, higher separator backlog units. We judge this will lead to important consolidated operating profit and nett income successful 2023 pinch nan quarter’s building connected nan 4th fourth of past twelvemonth arsenic Scott indicated.

The steps we’ve taken to amended profitability to day are producing tangible results. They’re evident successful our 4th fourth results and moreover much truthful successful our 2023 outlook. Our efforts to trim inventory and make rate are progressing, albeit astatine a slower pace. We’re laser focused connected expanding our rate flows and maintaining capable liquidity pinch ongoing action plans to amended early results. We’ve already made advancement successful nan first 4th of 2023 to date. We expect these improved results to accelerate, peculiarly successful nan 2nd half of nan year.

To execute our objectives, we’re moving intensely to trim inventory levels arsenic our proviso concatenation becomes much accordant and our accumulation rates gradually increase. We’ve sewage very tin group from astir nan institution focused connected really to make nan astir units successful nan shortest magnitude of time, while maximizing nan usage of on-hand materials and reducing manufacturing inefficiencies. We’re collaborating pinch our suppliers to minimize disruptions and guarantee and businesslike and accordant travel of materials. We’re moving intimately pinch our trader partners to equilibrium bid timing pinch their customer’s transportation needs. It’s a analyzable world Hyster-Yale Lift Truck challenge, but our teams are focused connected it and we’re making advancement arsenic we are operationally astatine Bolzoni and Nuvera arsenic well.

While we prosecute moving superior reductions, we’ll support subject complete our rate flows. We expect higher 2023 superior expenditures compared to nan importantly restrained 2022 levels, peculiarly successful nan 2nd half of nan year. The projected spending increases are basal to guarantee that we adequately support our accommodation and reasonably put successful projects that heighten our semipermanent profitable maturation opportunities.

As a consequence of these actions, we expect a important summation successful rate travel earlier financing activities successful 2023 compared pinch 2022. Despite nan near-term headwinds, we’ll stay focused connected executing our halfway strategies and will proceed to put for semipermanent profitable maturation complete time.

Our strategical initiatives stay consistent, but I want to supply a fewer cardinal updates for each business. The Lift Truck business is superior strategical attraction continues to beryllium connected introducing its caller modular and scalable products, arsenic good arsenic projects geared toward motortruck electrification and providing exertion advancements.

We’re besides focused connected transforming our income process by utilizing an manufacture focused attack to gathering our customer’s needs. Progress connected these cardinal initiatives continues. The first modular scalable products are presently being introduced successful nan Americas, and we expect to present them successful nan JAPIC markets successful mid-2023.

Last quarter, I indicated that our first hydrogen substance compartment powered instrumentality handler utilizing Nuvera substance compartment engines had started its aviator shape successful nan larboard of Los Angeles. After successfully performing successful lighter applications, this motortruck has precocious to much difficult applications and continues to execute well. The Lift Truck business besides is processing an electrified substance compartment scope stacker, which is expected to beryllium delivered to nan Port of Valencia, Spain successful nan first half of 2023 for testing.

The Lift Truck business and Nuvera are moving jointly pinch Hamburger Hafen und Logistik AG to supply 2 Hyster electrical instrumentality handling vehicles. These vehicles see nan first ever quiet instrumentality handler, powered by Nuvera substance compartment technology, and nan first Hyster terminal tractor successful Europe. The terminal tractor is expected to beryllium delivered to nan customer for testing successful mid-2023.

Beyond nan Lift Truck business, Bolzoni continues to activity connected streamlining and strengthening its operations. They’re expanding their revenues successful nan Americas while besides enhancing their expertise to service cardinal attachment industries and customers successful each world markets. In conjunction pinch this, they’re moving to grow their wide manufacture sales, marketing, and merchandise support capabilities.

Nuvera continues to attraction connected ramping up demonstrations and expanding bookings for its 45kW and 60kW engines. They’re besides processing a dense work 125kW motor tin of operating and much powerfulness demanding applications. In 2022, Nuvera announced respective projects pinch various 3rd parties were testing aliases readying to trial Nuvera engines successful dense work applications.

In summation Nuvera is fresh to motorboat 2 caller products, a 360kW and a 460kW substance compartment powered generator, which connection a modular zero emanation powerfulness solution for commercialized and business applications.

In summary, we’ve travel done a difficult year. We ended 2022 connected a precocious note. We’re focused connected controlling nan things. We focused past connected controlling nan things we could, including peculiarly our costs structures and our prices. And we worked diligently to negociate nan outer factors that we couldn’t control. Our return to profitability successful nan 4th fourth represents a important milestone and our business betterment plan. We person innovative products and we’ve built heavy customer relationships. These supply a beardown instauration for our business.

We’re encouraged by our progress, but judge that there’s much activity ahead. We’re poised for much important business improvements arsenic a consequence of activity successful 2021 and 2022. We expect continued advancement connected our cardinal strategical programs successful 2023, and we’ve sewage nan correct business building pinch nan halfway strategies successful spot to execute our semipermanent financial goals complete time.

We’ll now move to immoderate questions you whitethorn have.

Question-and-Answer Session


[Operator Instructions] Our first mobility is from Chip Moore from EF Hutton. Chip, your statement is now open. Please spell ahead.

Chip Moore

Good morning. Thanks for taking nan mobility and congrats connected each nan advancement this quarter. Wanted to inquire astir your commentary astir operating profits improving from Q4 each 4th successful 2023. Can you possibly speak to nan cadence of that betterment arsenic you worked done nan past of nan little separator backlog that you’ve got? I deliberation you talked astir possibly finishing that up connected nan first half. And there’s a follow-up. What are you factoring successful for Europe arsenic well?

Al Rankin

Well, fto maine conscionable remark connected nan quarterly cadence. As you constituent out, we had a bully 4th quarter. I deliberation we spot each denotation astatine nan 4th fourth tin – level tin continue. The first 4th we’re very encouraged pinch and we spot aft nan first 4th continuing improvements complete nan people of nan quarters. During nan twelvemonth immoderate of nan quarters of sizeable value but recognizing besides that our 3rd 4th is ever seasonally little 4th than different quarters successful nan twelvemonth aliases astatine slightest nan surrounding 2nd and 4th quarter. So we’re very encouraged pinch nan progression. We spot it moving successful nan correct direction. To get a 2nd of Europe. Maybe you’d remark connected Europe, Rajiv.

Rajiv Prasad

Yes, truthful Europe continues. As I said successful my remarks, nan Europe continues to person immoderate constraint proviso concatenation issues. We’re moving done those. We expect done nan twelvemonth for Europe measurement to increase. We’ve sewage plants person a – successful a gradual summation of that measurement arsenic we’ve discussed pinch our proviso chain. That’s wherever – that’s nan measurement we consciousness nan markets tin evolve. So gradual summation I deliberation successful some markets successful position of volume. I deliberation arsenic Al said, nan margins, I deliberation will again, said successful our remarks wherever successful nan first half of nan twelvemonth will beryllium mostly done nan bookings from anterior years and astatine a bully margin. So we expect that to travel done some successful Europe and successful North America.

Al Rankin

Yes, I think, we had beautiful bully margins. They adjusted modular separator level successful nan 4th quarter. And I deliberation we spot them getting amended arsenic we look done nan year. But arsenic Rajiv said, location still are immoderate laggard debased separator trucks successful nan first half. On nan different hand, location were rather a fewer of those trucks successful nan 4th quarter. So conscionable to put that successful perspective. I deliberation different move to really attraction connected is that connected nan 1 manus we will beryllium expanding our accumulation levels successful a mean measurement complete nan people of nan year. We deliberation that is successful statement pinch a gait that our suppliers tin activity constructively with. And successful that discourse arsenic nan twelvemonth progresses, we’re surely hoping and expecting that our suppliers will resoluteness their proviso problems and beryllium capable to proviso components connected a overmuch much timely basis.

That should let america to go importantly much businesslike successful our manufacturing operations than we person been successful nan 4th fourth and that we expect to beryllium successful nan first portion of nan year. So location are a batch of things that are moving successful nan correct guidance wherever we’re continuing to activity intimately pinch our proviso guidelines to make judge that their capabilities are what we need, and nan situation for doing that is improving. It’s improving because suppliers are solving their ain shortage problems. And I deliberation to immoderate grade it’s improving because excess request successful nan strategy is moving – is moderating. And truthful that gives nan suppliers much capacity to service our needs and to activity america done this play of our extended backlogs possibly successful nan discourse of a much mean economical prospects and maturation aliases moreover imaginable for diminution successful immoderate areas of nan world arsenic we look done 2023.

Chip Moore

Thanks. That’s very helpful. And I conjecture to travel connected that, Al. If we deliberation about, a imaginable deeper recession, you talked again astir this benignant of daze absorber of nan backlog position. And you besides mentioned, I think, very debased cancellation rates. Maybe conscionable speak to humanities replacement cycles and it feels for illustration possibly this is simply a unsocial rhythm successful position of what you could spot successful a recession script for nan company?

Al Rankin

Well, it’s unsocial for america successful nan consciousness that we person ne'er had a backlog anyplace adjacent these levels. So, that’s nan metallic lining for immoderate of nan troubles that we’ve been moving our measurement done here. We deliberation that arsenic Rajiv indicated successful his remarks that nan world markets will beryllium turning down, we don't spot a heavy aliases agelong recession because there's an atrocious batch of pent-up request arsenic Rajiv suggested for forklift trucks and for enhanced productivity connected nan portion of our customers.

So I deliberation we don't spot a heavy world recession and a large driblet off. We spot conscionable a downturn that brings america backmost to overmuch much sustainable semipermanent levels. But successful nan meantime, immoderate downturn location is, we've sewage a bully chance of riding done it because of our backlog. But understand besides that arsenic we nutrient and from our backlog, we're adding to our backlog each period and astatine slightest astatine nan existent time, we're continuing to book much bully separator trucks than we anticipated successful our plan.

So that's been continuing successful January and February and we dream that inclination whitethorn continue, but astatine nan moment, while nan backlog is reducing, its much mean than what we were expecting, and it intends that we're extending further retired into 2024 are astir merchandise lines. It's not 100% of them, but connected astir merchandise lines, they're surely nan precocious value. And I deliberation astir markets are performing amended than we expected that we expected much declines, and mostly nan markets are firmer than we thought they were going to be.

Chip Moore

That's great. If I could sneak 1 much successful connected Nuvera, awesome to spot those successful pilots underway. Can you remark possibly astir getting activity much broadly? And past I deliberation you mentioned that caller overmuch larger engines travel into market. Maybe you tin grow connected that and what that would target?

Al Rankin

Yes, sure. I mean, nan measurement Nuvera is going to marketplace is to person immoderate – aliases we person immoderate attraction segments that we deliberation will really request to modulation to substance cells successful their electrification journey. These are typically nan heaviest work type of larger trucks. And a bully illustration of that is our larboard equipment. That's why we're focused connected transitioning those first. But location are different industries that do that, you deliberation astir electrified buses. We're besides looking at, you've seen powerfulness procreation some static, which is nan caller offering from Nuvera but they're besides moving pinch partners who've sewage mobile generators, incredibly capable to complaint lithium-ion artillery cars and different vehicle.

So conscionable a mobile charger that has a substance compartment connected committee pinch lithium-ion batteries and acts arsenic nan charger for vehicles. So, immoderate caller segments are appearing that they're connected to. We deliberation putting nan demos retired is nan champion measurement that they person recovered to really get customers engaged and to prosecute their target market. So nan champion measurement to show really Nuvera is doing is to look astatine announcements that Nuvera will beryllium making astir demonstrations and partnerships arsenic we move forward.

In position of nan size of nan engines, we are seeing request for room engines much for motortruck applications and besides starting to spot immoderate marine applications that they're progressive successful on pinch locomotive. And each of those request larger platforms to support nan powerfulness needs. So that's why we are processing nan 125 kilowatt motor and operation of those will beryllium utilized successful those applications.

Chip Moore

Got it. Appreciate it. I'll hop backmost successful queue. Thanks.


Our adjacent mobility is from Steve Ferazani from Sidoti. Steve, your statement now open. Please spell ahead.

Steve Ferazani

Good greeting everyone. Thanks for each nan item connected nan call. I did want to revisit a small spot of nan erstwhile caller's first questions successful position of backlog and spell a small spot further successful position of looking astatine your orders and dollars per unit. The past 3 quarters remained pretty, beautiful steady. Trying to deliberation of not only nan stickiness of backlog but really you're reasoning astir pricing fixed your backlog remains truthful significant, and really overmuch business you mightiness beryllium conscionable turning distant correct now versus starting to prime up again and possibly being a small spot much elastic connected pricing?

Al Rankin

Yes, truthful I deliberation if surely arsenic nan stock of nan marketplace is down because of nan attack we are taking because of nan approach. We've been very strict connected our pricing and separator requirements fixed our backlog information and our expertise to present trucks. And we've seen nan marketplace judge that again, Al said this is an different marketplace that we haven’t seen before, and we’ve sewage customers now talking to america astir their 2024 needs.

And arsenic we move towards taking this manufacture based solution attack to solving our customers’ problem, we are benignant of moving pinch them to really put nan correct motortruck successful nan application. And because of nan modular scalable solutions that we have, we tin – astatine nan correct price, you tin get nan correct costs for nan exertion and that will support our margins.

So I deliberation it’s not conscionable nan firmness connected nan pricing, but besides immoderate of nan initiatives we’ve put successful place. Over nan past 3 years, it’s really supporting our approach. Now, location are customers who are not yet adapting that attack and we – and still trying to bid and bargain connected pricing terms, and those are nan ones that we’re not staying distant from, but we’re trying to activity pinch them to find nan correct solution for nan worth proposition they’re looking for.

And this is wherever our finance successful China could beryllium and successful Fuyang is nan accumulation installation will go much and much important. As we put nan correct trucks successful nan correct solution astatine our target separator again, our attraction is to – we person an economical exemplary and we want to spot these trucks astatine customers astatine target margins, not nan astir margins we tin get, but astatine target margin.

Al Rankin

This is going to beryllium a very, very overmuch reinforcement indeed, almost duplicative comment. But it’s really important from our vantage constituent that arsenic our backlogs and our existent – statesman to contract, and we request to beryllium much competitive, much broadly successful nan marketplace, we expect to person caller products, peculiarly including nan Fuyang products coming connected successful a clip cycle, which very overmuch fits nan request shape that we expect arsenic nan backlog comes down.

So that’s a very fortunate information from our constituent of view, but it’s besides nan consequence of nan – immoderate of nan strategical programs that I outlined, peculiarly nan modular and scalable merchandise programme and nan measurement it comes online first pinch nan 2 to 3 ton pneumatic trucks, and past it cascade into different trucks including nan much modular types of trucks that are beneath nan guidelines levels of our astir precocious introduced modular and scalable trucks. So it’s a bully fit. We’re encouraged.

Rajiv Prasad

Yes. We’re very passionate astir putting nan correct motortruck successful nan exertion and getting our target margin. That’s nan measurement we want to create nan marketplace and our commercialized strategy.

Al Rankin

So nan measurement I deliberation to deliberation astir it is that we expect to support bully margins, but we’ll do it successful a small different measurement than we’re doing it correct astatine nan moment.

Rajiv Prasad


Steve Ferazani

Makes sense. Makes sense. Thanks for nan item connected that. When I deliberation astir and I cognize this isn’t a 1 4th aliases 2 4th story, but erstwhile I deliberation astir nan expectations that moving superior trends down for aggregate factors, but arsenic proviso concatenation constraints easiness and you drawback up connected income to orders, surely that inclination should turn successful 2023, which would bespeak overmuch healthier rate travel arsenic we deliberation astir that privilege – contiguous privilege reducing debt. Is that reasonable to deliberation that way?

Al Rankin

Reducing what?

Rajiv Prasad

Reducing debt.

Steve Ferazani

Reducing debt.

Al Rankin

All right. Just to make it crystal clear here, our attraction is connected producing trucks for which we already person nan parts are a important proportionality of nan parts. And truthful if we tin find those 1 aliases 2 parts that are missing connected individual trucks, we tin activity done without bringing successful a batch of caller further inventory.

And it isn’t truthful overmuch a attraction connected bringing down debt, but arsenic moving superior comes down, nan indebtedness automatically reduces because we conscionable – we don’t person nan request for nan indebtedness successful bid to finance nan moving superior that we’ve already paid for. So location are a number of things that going to beryllium astatine activity here.

On nan 1 hand, receivables are going to inclination up. On nan different hand, inventory’s going to move down for nan reasons that we described. And 1 of nan things that’s besides going to beryllium happening is that payables are going to beryllium moving up because astatine nan moment, truthful overmuch of nan inventory that we person – we’ve already paid for, and we’ll travel backmost to much normalized levels of payables arsenic we move done nan people of nan year.

So that’s benignant of nan move that’s astatine play. And we would expect that nan rate flows successful nan business would much than prolong immoderate different uses successful rate – immoderate different uses of rate and let america to bring nan indebtedness down astatine nan aforesaid time.

Rajiv Prasad

I mean possibly Scott tin opportunity a small spot much astir this, but our debt, we person 2 types of debt, right? We person that word loan, which is really location for nan long-term. Then we person our revolver, which we usage for operationally, and our revolver has been higher than normal complete nan past mates of years that we’ve gone done this challenge.

We want to bring that backmost to our normal authorities that we tie during nan trough play successful nan month, and by nan extremity of nan month, it’s successful bully authorities – bully style beautiful overmuch not drawn. So that’s what we are moving towards. We deliberation we’ll get location successful nan 2nd half of nan twelvemonth sometime, truthful that, that’s nan superior mission.

And past immoderate excess rate we person beyond that will beryllium utilized for immoderate of nan strategical initiatives that we had planned, which we’ve held disconnected connected owed to this move that we’ve gone done complete nan past mates of years.

Scott Minder

Rajiv, this is Scott. I deliberation you’ve covered it well. By nan extremity of 2023, we expect to person little indebtedness balances arsenic nan moving superior comes down and uses of rate arsenic Rajiv outlined, beyond indebtedness salary down are to money our maturation initiatives and to support our factories to guarantee we tin efficiently nutrient nan expanding loans passim nan year.

Steve Ferazani

Perfect. Thanks everyone for that. Last 1 for me, conscionable connected Bolzoni, I deliberation you’d work together astir apt that Europe has held up a batch amended than we were astir apt reasoning six months ago. I would opportunity that, I’m guessing that you’ve seen nan aforesaid point noting that Bolzoni, a batch of that business is successful Europe. How overmuch does that amended arsenic Lift Truck, not conscionable from you, but from your competitors picks up a proviso chains eased? Or is that really much pinch nan replacement – pinch replacement parts? How do we request to deliberation astir Bolzoni?

Rajiv Prasad

No. We’ve sewage to deliberation astir Bolzoni arsenic a sum ratio of Lift Trucks. And because it’s an attachment that goes connected Lift Truck and typically they’re progressive successful caller motortruck sales, because it’s a caller attachment that goes pinch a caller truck. And arsenic our shipments emergence and our competitor’s shipment rise, that will beryllium bully for Bolzoni, because typically, their lead times are shorter than Lift Truck lead times. So customers and dealers typically bid those later than they bid Lift Trucks. Once they person a coagulated transportation day for nan Lift Truck, they’ll spell backmost 8 aliases 10 weeks from that and bid nan attachment.

So we do expect their attachment to very overmuch correlate pinch Lift Truck sales, particularly Class 5 and successful North America Class 4 and 5 trucks, and progressively now Class 1. But counterbalance trucks successful nan – I would say, successful nan 2 to 5 ton range. So that’d beryllium a bully successful a correlation. The different point I would say, nan America – Bolzoni Americas squad is doing very, very good beyond our expectation. They’re starting to summation traction and we are booking very well.

Al Rankin

I conscionable adhd that you should statement nan numbers that Scott went done successful immoderate item connected nan 4th quarter, because Bolzoni performed connected an underlying ground really very rather good successful nan 4th quarter. And location was conscionable a one-time waste that resulted successful write-off of goodwill that was allocated to that peculiar mini distribution entity astatine nan clip of nan acquisition. So it’s a very non-operating and alternatively artificial write-off that conscionable happens to travel from nan measurement a goodwill was allocated astatine nan clip of nan acquisition. So there’s momentum down Bolzoni, not conscionable successful nan future, but besides successful nan 4th quarter.

Steve Ferazani

Thanks for nan responses everyone. Appreciate it.

Alfred Rankin

Thanks, Steve.

Scott Minder

Thank you.


[Operator Instructions] Our adjacent mobility is from Brett Kearney from Gabelli & Company. Brett, your statement is now open. Please spell ahead.

Brett Kearney

Hi, bully morning. Thanks for taking my mobility and congratulations connected nan show advancement aft each nan difficult activity past mates of years.

Alfred Rankin

Thanks, Brett.

Brett Kearney

We’ve seen nan opportunity to benignant of accelerate momentum connected investing down nan strategical initiatives this year. Curious if you could thief america deliberation astir benignant of nan awesome buckets of superior – CapEx investments nan institution will beryllium making this year. And Al you talked astir progressively solving for productivity challenges that customers are facing, obviously, nan modular scalable programme is an important portion of that. Can you besides touch connected retired immoderate of Hyster’s precocious usability assistance systems and telematics offerings benignant of necktie into nan challenges you’re solving for your customer base?

Alfred Rankin

Yes. Let maine inquire Rajiv to reside that, but pinch a preface from me. It’s still early successful nan year, we want to beryllium darn judge that everything we deliberation is sustainable – is sustainable. But location are immoderate things that we would very overmuch for illustration to do successful which we surely dream to do arsenic we move done nan year, assuming it continues to move successful nan guidance that we expect. And indeed, successful our ain thinking, we’ve baked those successful and spot nan kinds of progressions that we described to you moreover pinch those things taken into account.

But I deliberation you’ll spot nan initiatives commencement to play retired successful nan 2nd half much than successful nan first half, because we’re going to watch to make judge that each nan pieces of nan equation proceed to clasp together. But against that backdrop fto maine inquire Rajiv to grow connected immoderate of nan momentum, I deliberation is nan champion connection to picture it that we consciousness we person going connected our exertion projects.

Rajiv Prasad

Sure. Maybe conscionable successful position of buckets for superior investment, we’ve sewage immoderate trim drawback up things to do, which would – which we request to do into – successful a number of our plants and besides immoderate of our improvement centers, which we’ll do successful nan 2nd half of nan year. As we motorboat nan modular scalable trucks, we’re optimizing nan footprint of our accumulation capability. We want to person proviso resiliency some for incoming material, but besides for trucks. So we will nutrient very akin aliases nan aforesaid trucks successful aggregate plants, truthful that needs to beryllium done. And past we – it’s our merchandise and exertion plants arsenic good arsenic our commercialized strategies that we are going to put in. So those are nan loose buckets. In position of our technology, what we spot – nan difficulties that we spot for our customers, productivity is decidedly one. And really there’s a immense magnitude of desire to understand their exertion to fig retired what nan trucks are doing, and truthful information is required to do that successful position of what nan trucks are doing, who’s operating nan trucks, are location immoderate issues connected nan truck?

And truthful our solution to that is to put telemetry connected our trucks. So, you person existent clip accusation connected what nan motortruck is doing and who’s driving it and really it’s performing. The adjacent area is really astir safety. What’s happening astatine our customers is they get seeing a precocious turnover of operators and difficult to enlistee operators. And truthful they’re moving towards little knowledgeable operators and that’s creating issues successful their exertion – successful their operations.

And that’s wherever our usability assistance systems person travel in. They’re really backup, benignant of go a spot of a support strategy for an inexperienced operator. Ensures that they’re not going to person that they – group astir nan motortruck tin beryllium detected, equipment astir nan motortruck tin beryllium detected and nan motortruck tin beryllium slowed down automatically. If trucks are passing each other, they tin slow down to guarantee there’s nary collision, truthful a batch of support strategy that nan usability keeps nan motortruck successful its stableness triangle, wherever it’s nan safest to operate.

So nan strategy does that successful support of nan operator. The usability is still responsible, but these support systems activity down nan scene. And surely customers are seeing immense use from this type of system. Now, nan eventual for usability readiness is to automate trucks. And we person a broad automation programme running. We person good complete now 300 trucks, automated trucks running. And we are learning from that and we’re processing our adjacent procreation system, which we telephone internally developed automation aliases IDA. And those are getting fresh to beryllium – we are trialing those successful our ain facilities. And sometime successful precocious 2023, early 2024, we’ll commencement to motorboat them and versions of those trucks will travel retired complete nan adjacent 3 aliases 4 years.

So automation is simply a captious part. And past of course, nan activity I’ve already said astir these ample trucks, putting substance cells successful electrification to trim nan c successful a footprint of our motortruck is simply a captious portion of our strategy. So whether that’s pinch precocious batteries specified arsenic lithium ion aliases pinch substance cells that’s a immense modulation and it’s a difficult modulation for our customers. We understand that. And truthful we are putting successful each nan infrastructure to thief our customers modulation from their existent substance system, whether that’s LPG, diesel aliases lead acerb batteries to either precocious batteries aliases substance cells. So those are nan superior exertion drivers. Now, there’s a batch of different activity going connected and we’ll talk astir that successful nan future.

Al Rankin

Just to elaborate a mini spot astir nan automation side. The backdrop of people is nan constituent that Rajiv made galore times, which is nan astir costly facet of nan operating costs of a assistance motortruck driver. And truthful that’s nan benignant of nan halfway backdrop. And past if you put it successful nan discourse of nan computing powerfulness that tin beryllium deployed successful today’s world connected a conveyance and successful nan discourse of nan guidance of nan vehicle, and past put that together pinch nan accrued sophistication of sensors that has developed complete nan last, I don’t know, Rajiv, 5 years, 7 years, peculiarly pushed on by nan automotive industry, which drives for debased cost.

And truthful we’re successful a position of being capable to bring automation guardant successful what I would telephone a highly controlled warehousing aliases manufacturing environment, wherever nan sophistication of nan package systems tin really negociate that situation very effectively. We tin usage nan sensors that are being utilized connected automobiles, but without nan immense number of variables that automated automobiles person to look successful a existent world situation that is not wrong a storage aliases a factory.

So, we spot a very awesome opportunity arsenic we look forward, and we deliberation that these are going to beryllium very overmuch benignant of task approaches and not conscionable nan waste of a product, but they’ll besides beryllium packaged successful a measurement that allows them to beryllium deployed by our dealers efficiently and comparatively easy into installation. So it’s a beautiful breathtaking limb of nan business arsenic we look forward. And we do deliberation that, I deliberation Rajiv you would work together that we deliberation our attack to – successful our internally developed exertion is unique and has competitory advantage of consequence. So that’s nan backdrop for what we’re up to successful that area, a small spot of elaboration.

Brett Kearney

Excellent. No, that’s very helpful. Thanks truthful overmuch Al and Rajiv.

Al Rankin

You’re welcome.

Christina Kmetko

Thank you. Okay. And pinch that we’ll reason our Q&A session. We’ll adjacent pinch a fewer last reminders. A replay of our telephone will beryllium disposable online later this morning. We’ll besides station a transcript connected nan investor relations website erstwhile it becomes available. If you person immoderate questions, please scope retired to me. You tin scope maine astatine nan telephone number connected nan property release. I dream you bask nan remainder of your day. And now I’ll move nan telephone backmost to Bruno to reason nan call. Thank you.


Ladies and gentlemen, this concludes today’s call. Please remember, a telephone replay will beryllium disposable during 7 days. Thank you for joining. You whitethorn now disconnect your lines. Thank you.

Editor: Naga

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