Hyster-Yale Materials Handling, Inc.

Good morning, ladies and gentlemen, and welcome to the Hyster Yale Inc. First Quarter 2025 Earnings Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, May 7, 2025. I would now like to turn the conference call over to Andrea Saba. Please go ahead.

Good morning, and thank you for joining us for Hyster Yale's first quarter 2025 earnings call. I'm Andrea Saba, Director of Investor Relations and Treasury. Joining me today are Al Rankin, Executive Chairman, Rajiv Prasad, President and Chief Executive Officer, and Scott Mender, Senior Vice President, Chief Financial Officer and Treasurer. During our call, we will be discussing our first quarter 2025 earnings release issued yesterday. You can find the earnings release and a replay of this webcast on the i3Yale website. The replay will remain available for approximately 12 months. Today's conference call contains forward-looking statements, which are subject to risks that could cause actual results to be materially different from those expressed or implied. These risks are described in greater detail in the earnings release and in our reports filed with the SEC. On this call, we will discuss our adjusted results. We believe that these are useful in evaluating the company's operating performance. Reconciliations of adjusted operating profit, net income, and earnings per share to the most directly comparable GAAP financial measures can be found in the company's earnings release and investor presentation filed with the SEC. With the formalities out of the way, let me turn the call over to Rajiv to begin.

Thanks, Andrea, and good morning, everyone. I'll start by sharing our outline on the current economic environment, how it impacts Hyster Yale, and how we plan to address these challenges in our business. Scott will follow with our detailed financial results, the assumptions built into our 2025 forecast, and our outlook for the second quarter and full year. Al will provide his perspective to wrap up our remarks, and then we'll open up the call for your questions. Since we last spoke in February, the global economic landscape has changed significantly. becoming more uncertain as a result of tariff policies. This shift required us to quickly reassess our sourcing, selling, and production strategies, adapting for what we know today and preparing for what may come in the future. Despite the challenges posed by the current economic environment, our commitment to delivering optimal solutions remains unwavering. We are confident in our ability to drive substantial long-term growth and profitability while adapting to the complexities of the global economy. While we have confidence in our actions, it's important to acknowledge the significant uncertainty created by shifting tariff levels and the corresponding effects on market demand and our cost structures. This macro level uncertainty requires us to be agile, remain responsive to market changes, and work to preserve our financial outlook. In the near term, we're taking action to maintain a solid financial position. We're applying lessons learned from pandemic era supply chain inflation by proactively monitoring our input costs, taking action to reduce them where possible, and quickly adjusting sales prices to offset any remaining cost increases. In quarter one, 2025, we adjusted our prices to address component inflation since our last broad pricing action in 2022, and to include non-tariff related cost increases. Over the medium term, we're leveraging our strategic initiative to further strengthen our business in all economic environments. Generally, our strategy is to produce and sell products in the same region to avoid excess shipping costs and enhance delivery time for assembled-to-order products. Today, our U.S. domestic operations account for approximately 65% of sales. This localized production helps reduce costs and mitigate finished vehicle tariffs. However, our global component sourcing strategy increases tariff exposure in today's environment. We will strive to minimize supply from high-tariff countries, but some materials are only available from these geographies. While we continue to push for new economically viable sources, our increasing lineup of modularly designed vehicles enables us to produce the same models across multiple facilities of both our suppliers and our own assembly operations. This allows us to maximize output across our global manufacturing network while minimizing input costs. It improves overall operational efficiency and increases our ability to manage shifting market conditions. Our long-term strategic focus on driving profitable growth through innovation and operating efficiency is clear. Our approach is rooted in thorough analysis and deliberation, ensuring that every decision supports the long-term health and success of our company. This enables our business to adapt intelligently to evolving market dynamics and deliver value to stakeholders across the business cycle. While the current landscape remains volatile, will continue to actively evaluate and implement a broad range of short and long-term mitigation strategies. These strategies, some of which require significant time and expense to implement, may require greater clarity and stability in the global trade environment before taking actions. We'll provide updates in the coming quarters as new plans emerge. We're a resilient company having emerged stronger and more agile from the pandemic with a clear direction and long-term dedication to achieving our goals. We're confident in our ability to manage through current uncertainties and make progress on our objectives. Turning to our view on global demand, despite the volatile global environment, the lift truck booking market showed encouraging signs of recovery in the Americas and particularly in EMEA. The market is expected to further stabilize throughout 2025. That improving view could change due to potential tariff effects, which we believe caused customer order hesitation in April. To support the first quarter bookings growth, our production rates are expected to increase in the second quarter. We expect to maintain our strong $1.9 billion backlog as we continue to keep production aligned with adjusting bookings. This will be balanced while adjusting pricing to counter inflation and mitigate tariffs. Next, I'll provide an overview of the strategic business realignment related to Nuvera that we announced on April 30th. This initiative is designed to enhance near-term profitability and create an integrated energy solutions program at our Billerica, Massachusetts facility as part of our lift truck business. This realignment includes three key areas. First, the development, manufacturing, and commercialization of lithium-ion battery modules, chargers, battery management systems, and energy management services. These products are critical for the lift truck business, as next-generation lithium-ion batteries are expected to increasingly replace lead-acid batteries in electric forklift trucks. Second, the development and commercialization of a mobile, modular, and scalable hybrid electric charging platform. This platform will deliver off-grid power solution to meet diverse customer needs and will feature a variant called HydroCharge, that utilizes Nuvera's proprietary fuel cell technology. Third, a more focused and streamlined fuel cell development program. We're finalizing a higher-powered 125-kilowatt fuel cell for use in port equipment and larger hydrocharge applications. This strategic shift reflects our conclusion that the current fuel cell business will not achieve profitability within an acceptable timeframe. largely due to lack of market demand and a changed political environment. The business realignment is expected to deliver direct annualized cost savings of $15 to $20 million, starting in the second half of 2025. Additionally, we also anticipate an additional $10 to $15 million of Newvera costs to be absorbed by the lift truck business, largely into open positions to accelerate programs on key growth initiatives. As a result of these actions, we expect to incur $15 to $18 million in severance and impairment costs during the second quarter, with the potential for additional charges as we progress. This strategy leverages Nivera's technical expertise to further transform our core lift truck business by accelerating growth and profitability of our battery and charger programs, launching our mobile charging platform for off-grid power solution, and completion of our port equipment electric power solutions. We anticipate battery program cells to accelerate in 2025 and continue to expand in subsequent years. Initial hydrocharged cells are expected to, in the second half of 2025, while battery and fuel cell powered port equipment is already undergoing customer testing. This strategic realignment complements High Speed Yale's broader transformation initiatives aimed at reimagining material handling solutions from port to home. It adds to ongoing programs in modular product development, manufacturing optimization, and expanded customer solutions. Through these initiatives, we aim to achieve significant revenue and profitability growth in lift truck and Bolzoni businesses, enhancing cash generation and capital returns across the business cycle. I'll now hand over to Scott to discuss our results, forecasts, and outlook. Scott?