Hyster-Yale Materials Handling, Inc.

Good day and welcome to the Hyster Yale Inc. Second Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Andrea Sabah, Director of Investor Relations and Treasury. Please go ahead.

Good morning, and thank you for joining us for Hyster Yale's second quarter 2025 earnings call. I'm Andrea Sabah, Director of Investor Relations and Treasury. Joining me today are Al Rankin, Executive Chairman, Rajiv Prasad, President and Chief Executive Officer, and Scott Minder, Senior Vice President, Chief Financial Officer, and Treasurer. During our call, we'll discuss our second quarter 2025 earnings release issued yesterday. You can find the earnings release and replay of this webcast on the Heister Yale 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 discuss our adjusted results. We believe that these are useful as a supplement to our GAAP financial measures 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 measure 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 view on the current economic environment, how it impacts ISDL, 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 third quarter and full year. Al will provide his perspective to wrap up our remarks, and then we'll open up the call for questions. Since our last update in May, Economic uncertainty continued to influence our business in significant ways. Fluctuating tariff levels impacting demand and cost structures require us to maintain nimble and responsive. We're keeping a close eye on these changes, assessing how they might affect our business and responding proactively. This keeps us well positioned in the market and ensures that we can consistently deliver on our key promises. Transparency is critical to our efforts. We're maintaining regular dealer communication, adjusting unit prices monthly based on actual product costs, raising prices as tariffs increase, lowering prices when tariff levels decrease to ensure that our unit economics reflect the current environment. This ongoing dialogue strengthens our relationship and shows our commitment to win-win partnerships. In the near term, we're taking clear steps to protect our financial health, drawing on what we learned during the pandemic. We're monitoring input costs closely, adjusting sales prices based on input cost changes, and diligently controlling our overhead costs. To support our dealer partners and other customers and protecting the order backlog, we chose not to retroactively raise prices on orders placed before recent tariff-related cost escalation. This built trust within our customer base and dealer network while also creating a temporary lag in cost recovery efforts. For the medium to long term, we're building on a strategic initiatives that strengthen our business across all economic conditions. Our strategy emphasizes manufacturing and selling products within the same region, helping to lower shipping costs and speed delivery. At the same time, global component sourcing exposes us to tariffs. While we work to limit purchases from the highest rate countries, the some materials alternative sources aren't yet available at the scale required. As we continue to seek out new cost-effective supply partners, our modular vehicle design allows us to produce the same models at different locations around the world. This flexibility ultimately helps us control costs, balance production, and react quickly as market conditions change. As tariff levels stabilize, we'll optimize production globally to ensure the most competitive product costs for each region. Despite these challenges, our dedication to providing the best customer solutions remains strong. We are increasing our ability to achieve steady long-term growth and profitability through innovation and efficiency as we adapt to global economic complexities. Our long-term focus ensures that every decision we make supports the company's ongoing health and success. Recent announcements, such as optimizing our manufacturing footprint and realigning our Nuvera business, demonstrates our ability to adapt swiftly to changing economic conditions. Our resilience built through the pandemic-related difficulties, along with our clear sense of direction, ensures that we are prepared to handle uncertainty and make progress on our goals. We'll continue to keep you updated as our plans develop. Scott will discuss our full year 2025 financial outlook in a moment. This projection is based on several important assumptions, especially those regarding tariffs and the steps we're taking to reduce their impact. Our proactive measures, including price adjustments, global sourcing, and supply chain management, and cost optimization are designed to help offset the expected tariff-related expense increases. Next, I would like to provide some context on the global lift truck bookings market. During the second quarter, lift truck market bookings contracted compared to the strong first quarter levels. This softening is a natural market reaction to the widespread economic uncertainty, causing many customers to defer capital expenditures. The hesitancy to commit to large purchases, especially in our customer base in the current climate, led to a temporary lift truck order slowdown, which was exasperated by COVID booking boom. This trend is not unique to our industry, but is reflective of the broader capital goods sector. These industries often require long-term investment decisions that are sensitive to tariff volatility, interest rates, and geopolitical developments. Despite current challenges, our second quarter quoting activity remains solid and comparable to the first quarter's improved levels. This sustained volume for new business proposals and price quotes is a positive business indicator. It demonstrates resilient underlying demand for our products despite customer postponing their purchase decisions. This trend should position us favorably for production and sales rebound once macroeconomic conditions stabilize. Specific to Heister Yale, in the second quarter, our bookings declined to 330 million, down from 590 million in the first quarter of 2025. The majority of this decrease was driven by softer demand in both Europe and the Americas, while bookings in Asia Pacific remained steady. First quarter bookings benefited from accelerated customer purchases ahead of tariff-related price increases. In contrast, second quarter bookings reflected heightened tariff-related uncertainty, which negatively impacted buying activity. Compared to the same quarter last year, Second quarter bookings decreased by 50 million, largely due to weaker demand in Europe, partially offset by an improvement in the Americas. These regional fluctuations highlight how quickly demand can shift. We continue to closely monitor market trends at a granular level, staying close to our dealers and our customers, remaining agile to capture additional market share with our new products and technologies. At the end of the second quarter, our order backlog was $1.7 billion, down from $1.9 billion in the previous quarter. This decrease was primarily due to shipments outpacing new bookings, particularly in the Americas. The current low and variable demand environment is challenging our ability to maintain a solid production backlog while also optimizing inventory levels. We are balancing factory output and material supply with evolving demand signals across a global supply chain. Ultimately, our goal is a healthy multi-month production backlog with reduced working capital levels. To further strengthen our market position, management is prioritizing proactive customer engagement. We're communicating with our customers to better understand their evolving needs, partnering to create product and purchasing solutions that help solve their most pressing challenges while navigating the ongoing economic uncertainty. These efforts are designed to build loyalty and ensure that when our customers' investment confidence returns, we're their preferred partners. At the same time, we're keeping a close watch on key markets and macroeconomic indicators. We are positioning our operations to flexibly scale production while aligning inventories. Longer term, we're optimizing our global manufacturing footprint as new products create opportunities to increase facility utilization. This agility is essential, enabling us to respond quickly to shifting demand patterns and ultimately reducing our break-even point to be more sustainably profitable. Looking ahead to the second half of 2025, we're planning to increase production rates to meet the expected demand uptick. However, while the ongoing economic uncertainty and tariff environment will remain cautious, if bookings do not materialize as anticipated, we're prepared to adjust production accordingly. As global economic conditions stabilize, we believe Hyster Yale's growth strategies positioned the company to accelerate bookings and capture additional market share. Our continued investments in product innovation, customer-facing sales and technology resources, supply chain resilience, and regional manufacturing flexibility are crucial to our success. By maintaining an operational excellence focus and by putting customers at the center of all we do, we're confident in our ability to navigate near-term challenges and deliver sustainable long-term growth for our stakeholders over time. Now I'll turn it over to Scott to provide more detailed financial results and our financial outlook.